Question
The following are two independent situations. Situation 1: Tamarisk Cosmetics acquired 10% of the 218,000 shares of common stock of Martinez Fashion at a total
The following are two independent situations.
Situation 1: Tamarisk Cosmetics acquired 10% of the 218,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2017. On June 30, Martinez declared and paid $71,300 cash dividend to all stockholders. On December 31, Martinez reported net income of $118,000 for the year. At December 31, the market price of Martinez Fashion was $14 per share.
Situation 2: Vaughn, Inc. obtained significant influence over Seles Corporation by buying 30% of Seless 32,300 outstanding shares of common stock at a total cost of $8 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,200. On December 31, Seles reported a net income of $82,000 for the year.
Prepare all necessary journal entries in 2017 for both situations.
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