Question
The following are two independent situations. Situation 1 Cheyenne Cosmetics acquired 10% of the191,000shares of common stock of Martinez Fashion at a total cost of
The following are two independent situations.
Situation 1
Cheyenne Cosmetics acquired 10% of the191,000shares of common stock of Martinez Fashion at a total cost of $14per share on March 18, 2020. On June 30, Martinez declared and paid $80,900cash dividend to all stockholders. On December 31, Martinez reported net income of $121,000for the year. At December 31, the market price of Martinez Fashion was $15per share.
Situation 2
Ayayai, Inc. obtained significant influence over Seles Corporation by buying30% of Seles's29,700outstanding shares of common stock at a total cost of $10per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $33,000 to all stockholders. On December 31, Seles reported a net income of $79,200for the year.
Prepare all necessary journal entries in 2020 for both situations.
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