Situation 1 Oriole 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, 2020. 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 Waterway, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $38,100 to all stockholders. On December 31, Seles reported a net income of $78,200 for the year. Prepare all necessary journal entries in 2020 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 0 for the amounts.)
Situation 1 Oriole 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, 2020. 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 Waterway, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $38,100 to all stockholders. On December 31, Seles reported a net income of $78,200 for the year. Prepare all necessary journal entries in 2020 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 0 for the amounts.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Situation 1
Oriole 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, 2020. 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
Waterway, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $38,100 to all stockholders. On December 31, Seles reported a net income of $78,200 for the year.
Prepare all necessary
PLEASE HELP.
LIST OF ACCOUNTS AS FOLLOW.
- Accumulated Other Comprehensive Loss
- Allowance for Doubtful Accounts
- Allowance to Reduce Inventory to Market
Bad Debt Expense- Bonds Payable
- Cash
- Call Option
- Common Stock
- Cost of Goods Sold
- Debt Investments
- Dividend Revenue
- Dividend Receivable
- Equity Investments
- Fair Value Adjustment
- Futures Contract
- Gain on Sale of Investments
- Gain on Settlement of Call Option
- Gain on Settlement of Put Option
- Interest Expense
- Interest Receivable
- Interest Revenue
- Inventory
- Investment Income
- Loss on Impairment
- Loss on Sale of Investments
- Loss on Settlement of Call Option
- Loss on Settlement of Put Option
- No Entry
- Notes Payable
- Paid-in Capital in Excess of Par - Common Stock
- Put Option
- Recovery of Loss from Impairment
Retained Earnings - Revenue from Investment
- Sales Revenue
- Swap Contract
- Unrealized Holding Gain or Loss - Equity
- Unrealized Holding Gain or Loss - Income
Transcribed Image Text:Date
Account Titles and Explanation
Debit
Credit
Situation 1: Oriole Cosmetics
Mar. 18, 2020
Investment Income
267400
Cash
267400
June 30, 2020
Cash
6920
Dividend Revenue
6920
Dec. 31, 2020
Fair Value Adjustment
19100
Unrealized Holding Gain or Loss - Income
19100
Situation 2: Waterway, Inc
Jan. 1, 2020
Equity Investments
102600
Cash
102600
June 15, 2020
Cash
15240
Equity Investments
15240
Dec. 31, 2020
Equity Investments
31280
Revenue from Investment
31280
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