Ask Question
23 March, 23:20

The following are two independent situations.

Situation 1: Conchita Cosmetics acquired 10% of the 204,600 shares of common stock of Martinez Fashion at a total cost of $15 per share on March 18, 2014. On June 30, Martinez declared and paid a $77,200 cash dividend. On December 31, Martinez reported net income of $123,100 for the year. At December 31, the market price of Martinez Fashion was $17 per share. The securities are classified as available-for-sale.

Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 32% of Seles's 32,800 outstanding shares of common stock at a total cost of $11 per share on January 1, 2014. On June 15, Seles declared and paid a cash dividend of $40,400. On December 31, Seles reported a net income of $87,500 for the year.

Required:

Prepare all necessary journal entries in 2014 for both situations.

+4
Answers (1)
  1. 24 March, 03:13
    0
    Situation 1:

    March 18, 2014

    investment at avialble for sale 3069000

    Cash 3069000

    To record the Investment at available for sale.

    June 30

    Cash 77200

    dividend income 77200

    To record the cash dividend.

    December 31,

    Cost of investment = 204600*15 = 3069000

    F. value of investment = 204600*17 = 3478200

    Gain/Loss = 409200

    investment at avialble for sale 409200

    Cash 409200

    the invest is recorded at investment at avialble so the revaluation gain and loss will be recorded in the Other comprehensive income.

    Situation 2:

    invest in associate 360800

    Cash 360800

    To record the investment at cost

    invest in associate (32800*4) 131200

    Revaluation gain P/L (32800*4) 131200

    to record the revaluation gain on investment in assocaite

    Cash 40400

    dividend income 40400

    to record the dividend income
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The following are two independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 204,600 shares of common stock of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers