These are two independent situations: 1. Sosey Cosmetics acquired 12% of the 300,000 shares of common stock

Question:

These are two independent situations:

1. Sosey Cosmetics acquired 12% of the 300,000 shares of common stock of Elite Fashion at a total cost of $14 per share on March 18, 2022. On June 30, Elite declared and paid a $75,000 dividend. On December 31, Elite reported net income of $244,000 for the year. At December 31, the market price of Elite Fashion was $16 per share.

2. Williams Inc. obtained signifi cant infuence over Kasey Corporation by buying 25% of Kasey’s 30,000 outstanding shares of common stock at a total cost of $11 per share on January 1, 2022. On June 15, Kasey declared and paid a cash dividend of $35,000. On December 31, Kasey reported a net income of $120,000 for the year.

Instructions

Prepare all the necessary journal entries for 2022 for (a) Sosey Cosmetics and (b) Williams Inc.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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