Presented below are two independent situations. 1. Gambino Cosmetics acquired 15

Question

Presented below are two independent situations.

1. Gambino Cosmetics acquired 15% of the 120,500 shares of common stock of Nevins Fashion at a total cost of $12 per share on March 18, 2015. On June 30, Nevins declared and paid a $70,400 dividend. On December 31, Nevins reported net income of $118,200 for the year. At December 31, the market price of Nevins Fashion was $14 per share. The stock is classified as available-for-sale.
2. Kanza, Inc., obtained significant influence over Rogan Corporation by buying 30% of Rogan’s 32,900 outstanding shares of common stock at a total cost of $7 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $27,400. On December 31, Rogan reported a net income of $73,100 for the year.

Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

No.
Date
Account Titles and Explanation
Debit
Credit
(a)

Jan. 1
Mar. 18
June 15
June 30
Dec. 31

Jan. 1
Mar. 18
June 15
June 30
Dec. 31

Jan. 1
Mar. 18
June 15
June 30
Dec. 31
(b)

Jan. 1
Mar. 18
June 15
June 30
Dec. 31

Jan. 1
Mar. 18
June 15
June 30
Dec. 31

Jan. 1
Mar. 18
June 15
June 30
Dec. 31

Explanation / Answer

JOURNAL ENTRIES WORKINGS A) ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT MAR18,2015 INVESTMENT IN COMMON STOCK OF NEVINS FASHION A/C           Dr 1446000 120500*12                  TO CASH A/C 1446000 (BEING PURCHASED 120500 SHARES OF COMMON STOCK AT $12/- PER SHARE IN NEVINS FASHION) JUNE30,2015 CASH A/C                                                                                                              Dr 70400                    TO INVESTMENT IN COMMON STOCK OF NEVINS FASHION A/C 70400 (BEING DIVIDEND RECEIVED) DEC31,2015 INVESTMENT IN COMMON STOCK OF NEVINS FASHION A/C           Dr 17730 118200*15%                     TO SHARE IN EARNINGS OF NEVINS FASHION A/C 17730 (BEING SHARE IN EARNINGS OF NEVINS FASHION RECOGNISED) BALANCE IN A/C=1446000-70400+17730=1393330 FAIR VALUE = 120500*14=1687000 DEC31,2015 INVESTMENT IN COMMON STOCK OF NEVINS FASHION A/C           Dr 293670 1687000-1393330                     TO OTHER COMPREHENSIVE INCOME A/C 293670 (BEING DIFFERNCE IN FAIR VALUE AND CARRYING AMOUNT CREDITED TO OTHER COMPREHENSIVE INCOME) B) JAN1,2015 INVESTMENT IN COMMON STOCK OF ROGANS CORPORATION A/C           Dr 230300 32900*7                  TO CASH A/C 230300 (BEING PURCHASED 32900 SHARES OF COMMON STOCK AT $7/- PER SHARE IN NEVINS FASHION) JUNE15,2015 CASH A/C                                                                                                              Dr                    TO INVESTMENT IN COMMON STOCK OF ROGANS CORPORATIONA/C 27400 (BEING DIVIDEND RECEIVED) 27400 DEC31,2015 INVESTMENT IN COMMON STOCK OF ROGANS CORPORATIONA/C 21930 73100*30%                     TO SHARE IN EARNINGS OF ROGANS CORPORATION A/C 21930 (BEING SHARE IN EARNINGS OF ROGANS CORPORATION RECOGNISED)

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