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
icon
Related questions
Topic Video
Question
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.
Transcribed Image Text: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.
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Accounting Equation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education