Question
Presented below are two independent situations. Prepare all necessary journal entries in 2012 for each situation. Situation 1 Hatcher Cosmetics acquired 10% of the 201,500
Presented below are two independent situations.
Prepare all necessary journal entries in 2012 for each situation.
Situation 1 Hatcher Cosmetics acquired 10% of the 201,500 shares of common stock of Ramirez Fashion at a total cost of $15 per share on March 18, 2012. On June 30, Ramirez declared and paid a $84,000 cash dividend. On December 31, Ramirez reported net income of $125,400 for the year. At December 31, the market price of Ramirez Fashion was $17 per share. The securities are classified as available-for-sale.
Situation 2 Holmes, Inc. obtained significant influence over Nadal Corporation by buying 25% of Nadal's 33,200 outstanding shares of common stock at a total cost of $12 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $42,600. On December 31, Nadal reported a net income of $86,600 for the year.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started