Question
he following are two independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 201,400 shares of common stock of Martinez Fashion at a total
he following are two independent situations.
Situation 1: Conchita Cosmetics acquired 10% of the 201,400 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2014. On June 30, Martinez declared and paid a $83,300 cash dividend. On December 31, Martinez reported net income of $128,300 for the year. At December 31, the market price of Martinez Fashion was $15 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 33,200 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 $41,000. On December 31, Seles reported a net income of $94,400 for the year.
Required:
Prepare all necessary journal entries in 2014 for both situations.
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