Exercise 17-12

The following are two independent situations.

Situation 1

Martinez Cosmetics acquired 10% of the 182,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $76,700 cash dividend to all stockholders. On December 31, Martinez reported net income of $113,500 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2

Sandhill, Inc. obtained significant influence over Seles Corporation by buying 30% of Seless 28,900 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 $35,400. On December 31, Seles reported a net income of $92,300 for the year.

Prepare all necessary journal entries in 2017 for both situations.