Example 5

Scenario A:

Cuban Cosmetics acquired 10% of the 200,000 shares of common stock of Jones Company for $13 per share on March 15, 2022. On June 30, Jones declared and paid a $75,000 cash dividend. On December 31, Jones reported net income of $122,000 for the year and the market price of Jones common stock was $15 per share.

Scenario B:

On January 1, 2022, Jane, Inc. obtained significant influence over Tarzan Corporation by purchasing 30% of Tarzans 30,000 outstanding shares of common stock at a total cost of $9 per share. On June 15, Tarzan declared and paid a cash dividend of $36,000. On December 31, Tarzan reported net income of $85,000 for the year and the market price of Tarzans common stock was $8 per share.

Required:

Prepare the 2022 journal entries for Cuban Cosmetics.

Prepare the 2022 journal entries for Jane, Inc.