The following are two independent situations. Situation 1 Flounder Cosmetics acquired 10% of the 207,000 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 $70,100 cash dividend to all stockholders. On December 31, Martinez reported net income of $112,700 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2 Culver, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles's 30,800 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 $33,000 to all stockholders. On December 31, Seles reported a net income of $86,300 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 O for the amounts.) Date Mar. 18, 2020 June 30, 2020 V Dec. 31, 2020 Account Titles and Explanation Cash Cash Dividend Revenue Fair Value Adjustment Situation 1: Flounder Cosmetics Unrealized Holding Gain or Loss - Income Debit 289800 7010 Credit 289800 7010
The following are two independent situations. Situation 1 Flounder Cosmetics acquired 10% of the 207,000 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 $70,100 cash dividend to all stockholders. On December 31, Martinez reported net income of $112,700 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2 Culver, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles's 30,800 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 $33,000 to all stockholders. On December 31, Seles reported a net income of $86,300 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 O for the amounts.) Date Mar. 18, 2020 June 30, 2020 V Dec. 31, 2020 Account Titles and Explanation Cash Cash Dividend Revenue Fair Value Adjustment Situation 1: Flounder Cosmetics Unrealized Holding Gain or Loss - Income Debit 289800 7010 Credit 289800 7010
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please Do not Give image format
Transcribed Image Text:Jan. 1, 2020
June 15, 2020
Dec. 31, 2020
Cash
Cash
Situation 2: Culver, Inc
110880
13200
34520
110880
13200
34520
Transcribed Image Text:The following are two independent situations.
Situation 1
Flounder Cosmetics acquired 10% of the 207,000 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 $70,100 cash dividend to all stockholders. On December 31, Martinez
reported net income of $112,700 for the year. At December 31, the market price of Martinez Fashion was $15 per share.
Situation 2
Culver, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles's 30,800 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 $33,000 to all stockholders.
On December 31, Seles reported a net income of $86,300 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 O for the amounts.)
Date
Mar. 18, 2020
June 30, 2020
Dec. 31, 2020
Account Titles and Explanation
Cash
Cash
Dividend Revenue
Fair Value Adjustment
Situation 1: Flounder Cosmetics
Unrealized Holding Gain or Loss -Income
Debit
289800
7010
Credit
289800
7010
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