2. Cristal Corporation paid $50,000 for a 10% interest in Luna Corp. on January 1, 2014, whenLuna's stockholders' equity consisted of $400,000 of $10 par value common stock and $100,000retained earnings. On December 31, 2015, Cristal paid $96,000 for an additional 20% interest inLuna Corp. Both of Cristal's investments were made when Luna's book values equaled their fairvalues. Luna's net income and dividends for 2014 and 2015 were as follows:Net incomeDividends2014$30,000$10,0002015$70,000$20,000Required:a. Prepare journal entries for Cristal Corporation to account for its investment in LunaCorporation for 2014 and 2015.b. Calculate the balance of Cristal's investment in Luna at December 31, 2015.

Name: 2. Cristal Corporation paid $50,000 for a 10% interest in Luna Corp.
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Description: 2. Cristal Corporation paid $50,000 for a 10% interest in Luna Corp. on January 1, 2014, whenLuna's stockholders' equity consisted of $400,000 of $10 par value common stock and $100,000retained earnings. On December 31, 2015, Cristal paid $96,000 fo

Acquiring a partial ownership stake in a company, such as 10% or 20%, involves purchasing a portion…

Answered: a. Prepare journal entries for Cristal…

Business

Accounting

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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