Situation 1 Sunland Cosmetics acquired 10% of the 191,000 shares of common stock

Question

Situation 1 Sunland Cosmetics acquired 10% of the 191,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2017. On June 30, Martinez declared and paid $69,200 cash dividend to all stockholders. On December 31, Martinez reported net income of $116,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2 Coronado, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles': 29,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $38.100. On December 31, Seles reported a net income of $78,200 for the year. Prepare all necessary journal entries in 2017 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 o for the amounts.) Debit Credit Date Account Titles and Explanation Situation 1: Sunland Cosmetics Mar. 18, 2017 M Debt Investments 267400 Cash 267400 June 30, 2017 M Cash 6920 Debt Investments 6920 Dec. 31. 2017 v Fair value Adjustment 19100 19100 Unrealized Holding Gain or Loss -Income Situation 2i Coronado, Inc Jan. 1, 2017 102600 Cash 1025C Jung 15, 2017 • Czh

Explanation / Answer

Cornado inc Date Account titles & Explanations Debit Credit 1-Jan investment in Selses corporation 102600 cash 102600 (28500*40%)*9 Cash 15240 investment in Seles Corporation 15,240 (38100*40%) investment in Seles corportion 31280 investment income 31,280 (78200*40%)

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