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.

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.

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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