QuestionExercise 17-12

19 May QuestionExercise 17-12

Posted at 07:05h in Essay Writing Services by Past Papers

Question

Exercise 17-12

Presented below are two independent situations.

Situation 1

Hatcher Cosmetics acquired 10% of the 215,000 shares of common stock of Ramirez Fashion at a total cost of $16 per share on March 18, 2012. On June 30, Ramirez declared and paid a $77,400 cash dividend. On December 31, Ramirez reported net income of $130,400 for the year. At December 31, the market price of Ramirez Fashion was $18 per share. The securities are classified as available-for-sale.

Situation 2

Holmes, Inc. obtained significant influence over Nadal Corporation by buying 27% of Nadal’s 31,300 outstanding shares of common stock at a total cost of $10 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $36,300. On December 31, Nadal reported a net income of $89,600 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.)

Date

Account Titles and Explanation

Debit

Credit

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