Question

*Exercise 17-12 The following are two independent situations. Situation 1 Sunland 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, 2017. On June 30, Martinez declared and paid $80,900 cash dividend to all stockholders. On December 31, Martinez reported net income of $121,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2 Coronado, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 29,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $33,000. On December 31, Seles reported a net income of $79,200 for the year. Prepare all necessary journal entries in 2017 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 Debit Credit Account Titles and Explanation Situation 1: Sunland Cosmetics Mar. 18, 2017 Cash June 30, 2017 Dec. 31, 2017 Situation 2: Coronado, Inc Jan. 1, 2017 June 15, 2017 Dec. 31, 2017

Answer 1

Answer
Situation 1 - Sunland Cosmetics
		Accounting titles & Explanations	Debit	Credit
	18-Mar	Available for sale securities	$     267,400
		Cash(19100*14)		$     267,400
	30-Jun	Cash	$         8,090
		Dividend revenue (80900*10%)		$         8,090
	31-Dec	Fair value adjustment(191,00*1)	$       19,100
		unrealized holding gain or loss		$       19,100

Situation 2- Corondo inc
	Accounting titles & Explanations	Debit	Credit
01-Jan	investment in stock	$       89,100
	cash (29,700*10*30%)		$       89,100
15-Jun	Cash (33000*30%)	$         9,900
	investment		$         9,900
31-Dec	investment	$       23,760
	income on investment(79200*30%)		$       23,760