Exercise 17-12 The following are two independent situations. Situation 1 Waterwa

Question

Exercise 17-12

The following are two independent situations.

Situation 1
Waterway Cosmetics acquired 10% of the 207,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2017. On June 30, Martinez declared and paid $70,100 cash dividend to all stockholders. On December 31, Martinez reported net income of $112,700 for the year. At December 31, the market price of Martinez Fashion was $15 per share.

Situation 2
Wildhorse, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles’s 30,800 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $33,000. On December 31, Seles reported a net income of $86,300 for the year.

Prepare all necessary journal entries in 2017 for both situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date
Account Titles and Explanation
Debit
Credit
Situation 1: Waterway Cosmetics

Jan. 1, 2017
Mar. 18, 2017
June 15, 2017
June 30, 2017
Dec. 31, 2017

Jan. 1, 2017
Mar. 18, 2017
June 15, 2017
June 30, 2017
Dec. 31, 2017

Jan. 1, 2017
Mar. 18, 2017
June 15, 2017
June 30, 2017
Dec. 31, 2017
Situation 2: Wildhorse, Inc

Jan. 1, 2017
Mar. 18, 2017
June 15, 2017
June 30, 2017
Dec. 31, 2017

Jan. 1, 2017
Mar. 18, 2017
June 15, 2017
June 30, 2017
Dec. 31, 2017

Jan. 1, 2017
Mar. 18, 2017
June 15, 2017
June 30, 2017
Dec. 31, 2017

Explanation / Answer

Situation 1

Situation 2

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