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The following are two independent situations. Situation 1 Sweet Cosmetics acquired 10% of the 198,000 shares of common stock of Martinez Fashion at a total
The following are two independent situations. Situation 1 Sweet Cosmetics acquired 10% of the 198,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2020. On June 30, Martinez declared and paid $82,000 cash dividend to all stockholders. On December 31, Martinez eported net income of $119,400 for the year. At December 31, the market price of Martinez Fashion was $13 per share. Situation 2 Pharoah, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles's 28,200 outstanding shares of common stock at a total cost of $10 per share on January 1, 2020. On June Seles declared and paid cash dividends of $36,300 to all stockholders. On December 31, Seles reported a net income of $87,100 for the year. Prepare all necessary journal entries in 2020 for both situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts.) Date Debit Credit Account Titles and Explanation Situation 1: Sweet Cosmetics Mar. 18, 2020 Cash June 30, 2020 Cash Dividend Revenue Dec 31, 2020 Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Situation Pharoah, Inc Jan 1, 2020 Gain on Sale of Investments
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