ACC/423 Week 3 Question 2 - 63898

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rmodene

rmodene

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Presented below are two independent situations.

Situation 1
Hatcher Cosmetics acquired 10% of the 210,700 shares of common stock of Ramirez Fashion at a total cost of $15 per share on March 18, 2012. On June 30, Ramirez declared and paid a $83,100 cash dividend. On December 31, Ramirez reported net income of $122,800 for the year. At December 31, the market price of Ramirez Fashion was $17 per share. The securities are classified as available-for-sale.

Situation 2
Holmes, Inc. obtained significant influence over Nadal Corporation by buying 28% of Nadal’s 33,900 outstanding shares of common stock at a total cost of $12 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $45,000. On December 31, Nadal reported a net income of $87,800 for the year.

Prepare all necessary journal entries in 2012 for both situations. 
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)  Answer is below

Solution Description

June 30, 2012Dividend Revenue = ($83,100 x 10%) = $8,310 Dec. 31, 2012Unrealize

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