2. Cristal Corporation paid $50,000 for a 10% interest in Luna Corp. on January 1, 2014, when Luna's stockholders' equity consisted of $400,000 of $10 par value common stock and $100,000 retained earnings. On December 31, 2015, Cristal paid $96,000 for an additional 20% interest in Luna Corp. Both of Cristal's investments were made when Luna's book values equaled their fair values. Luna's net income and dividends for 2014 and 2015 were as follows: Net income Dividends 2014 $30,000 $10,000 2015 $70,000 $20,000 Required: a. Prepare journal entries for Cristal Corporation to account for its investment in Luna Corporation for 2014 and 2015. b. Calculate the balance of Cristal's investment in Luna at December 31, 2015.

2. Cristal Corporation paid $50,000 for a 10% interest in Luna Corp. on January 1, 2014, when Luna's stockholders' equity consisted of $400,000 of $10 par value common stock and $100,000 retained earnings. On December 31, 2015, Cristal paid $96,000 for an additional 20% interest in Luna Corp. Both of Cristal's investments were made when Luna's book values equaled their fair values. Luna's net income and dividends for 2014 and 2015 were as follows: Net income Dividends 2014 $30,000 $10,000 2015 $70,000 $20,000 Required: a. Prepare journal entries for Cristal Corporation to account for its investment in Luna Corporation for 2014 and 2015. b. Calculate the balance of Cristal's investment in Luna at December 31, 2015.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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