acc-question2

 

Presented below are two independent situations.

Situation 1

Hatcher Cosmetics acquired 10% of the 206,400 shares of common stock of Ramirez Fashion at a total cost of $14 per share on March 18, 2012. On June 30, Ramirez declared and paid a $84,100 cash dividend. On December 31, Ramirez reported net income of $125,200 for the year. At December 31, the market price of Ramirez Fashion was $15 per share. The securities are classified as available-for-sale.

Situation 2

Holmes, Inc. obtained significant influence over Nadal Corporation by buying 26% of Nadal’s 32,900 outstanding shares of common stock at a total cost of $11 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $41,100. On December 31, Nadal reported a net income of $86,100 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
Hatcher Cosmetics
March 18, 2012
[removed]
[removed]
[removed]
 
[removed]
[removed]
[removed]
June 30, 2012
[removed]
[removed]
[removed]
 
[removed]
[removed]
[removed]
Dec. 31, 2012
[removed]
[removed]
[removed]
 
[removed]
[removed]
[removed]
Holmes Inc.
Jan. 1, 2012
[removed]
[removed]
[removed]
 
[removed]
[removed]
[removed]
June 15, 2012
[removed]
[removed]
[removed]
 
[removed]
[removed]
[removed]
Dec. 31, 2012
[removed]
[removed]
[removed]
 
[removed]
[removed]
[removed]
 

 
 
 
List Of Accounts    
Bonds Payable
Call Option
Cash
Cost of Goods Sold
Debt Investments
Dividend Receivable
Dividend Revenue
Equity Investments
Fair Value Adjustment
Futures Contract
Gain on Sale of Investments
Interest Expense
Interest Receivable
Interest Revenue
Inventory
Investments
Loss on Impairment
Loss on Investments
Loss on Settlement of Call Option
Loss on Settlement of Put Option
Memo Entry
No Entry
Notes Payable
Put Option
Retained Earnings
Revenue from Investment
Sales Revenue
Swap Contract
Unrealized Holding Gain or Loss – Equity
Unrealized Holding Gain or Loss – Income

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