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Presented below are two independent situations.

Prepare all essential journal entries in 2012 for each situation.

Situation 1:

Hatcher Cosmetics acquired 10% of the 207,400 shares of common stock of Ramirez Fashion at a net cost of $15 per share on March 18, 2012. On June 30, Ramirez declared and paid a $80,200 cash dividend. On December 31, Ramirez reported total income of $123,500 for the year. At December 31, the market price of Ramirez Fashion was $18 per share. The securities are categorized as available-for-sale.

Situation 2:

Holmes, Inc. obtained important affect over Nadal Corporation by buying 25% of Nadal's 30,800 outstanding shares of common stock at a total cost of $9 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $43,800. On December 31, Nadal reported a net income of $90,500 for the year.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M915915

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