(a) Gambino Cosmetics acquired 15% of the 123,500 shares ofcommon stock of Nevins Fashion at a total cost of $10 per shareon March 18, 2017. On June 30, Nevins declared and paid a$58,800 dividend. On December 31, Nevins reported net incomeof $120,100 for the year. At December 31, the market price ofNevins Fashion was $12 per share. The stock is classified asavailable-for-sale. (b) Kanza, Inc., obtained significant influenceover Rogan Corporation by buying 35% of Rogan's 24,900outstanding shares of common stock at a total cost of $5 pershare on January 1, 2017. On June 15, Rogan declared and paida cash dividend of $33,700. On December 31, Rogan reported anet income of $82,600 for the year.:Prepare all the necessaryjournal entries for 2017 for (a) Gambino Cosmetics and (b)Kanza, Inc.

Answer 1 DateParticularLFDebit Amount ($)Credit Amount ($)3/18/2019Available for sale…

Answered: (a) Gambino Cosmetics acquired 15% of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hanson Corporation purchases a 10% interest in Novic Company on January 1, 2016, and an additional 15% interest on January 1, 2018. These investments cost Hanson Corporation $80,000 and $110,000, respectively. The following stockholders’ equities of Novic Company are available: December 31, 2015 December 31, 2017 Common stock ($10 par). . . . . . . . . .$500,000 $500,000 Retained earnings . . . . . . . . . . . . . . . . . 250,000 300,000 Total equity . . . . . . . . . . . . . . . . . . . . . . $750,000 $800,000 Any excess of cost over book value on the original investment is attributed to goodwill. Any excess on the second purchase is attributable to equipment with a 4-year life. Novic Company has income of $30,000, $30,000, and $40,000 for 2016, 2017, and 2018, respectively. Novic pays dividends of $0.20 per share in 2017 and 2018. Ignore income tax considerations, and assume…
On October 1, 2021, Taehyung Company acquired 40,000 ordinary shares for $880,000 at to be held for trading. On November 30, 2021, the investee declared and distributed a 10% ordinary stock dividend when the market price of the share was $250. On December 31, 2021, the entity sold 4,000 shares for $1,000,000. On December 31, 2021, the market value of the shares was $625 per share. For the year ended December 31, 2021, what amount should be reported as gain on sale of investment?
The Parent Company purchased common stock of Sub Company in a series of open-market purchases in 2021 and 2022. January 1, 2021 purchased 2,000 shares at $12 per share. January 1, 2022 purchased 9,000 downloadshared at $15 per share. Sub Company had 20,000 shares of $10 par value common stock outstanding for the entire period. Dividends of 12000 were paid on December 31, 2022. Sub Company had Net Income of $25,000 in 2021 and $40,000 in 2022. The amount of revaluation loss the Parent Company recognizes in 2022: The net impact on Parent Company books of the Investment in Sub Company account due to the 2022 dividends and net income of Sub Company would be:
Investment in Equity Kalvin Co. acquired 15% of the 5,000,000 shares of common stock of Tops Co. at a cost of $8.50 per share on January 1, 2017. Tops Co. declared and paid a $250,000 cash dividend and reported net income of $685,000 for the year. On January 2, 2018, Kalvin sold these shares at a market price of $9.00 per share. Required: Prepare all necessary journal entries for 2017 and 2018.
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Situation 1: Novak Cosmetics acquired 10% of the 193,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2025. On June 30, Martinez declared and paid $67,500 cash dividends to all stockholders. On December 31, Martinez reported net income of $118,700 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2: Splish, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles's 30,700 outstanding shares of common stock at a total cost of $8 per share on January 1, 2025. On June 15, Seles declared and paid cash dividends of $38,300 to all stockholders. On December 31, Seles reported a net income of $84,200 for the year. Prepare all necessary journal entries in 2025 for both situations. (List all debit entries before credit entries. 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…
Excellence Auto Inc. (EAI) has 150,000 shares issued in total. Assume that on January 1, 2021, Power One Corporation acquired 15% of EAI's shares for $45 per share. Power One is assumed not to have significant influence over EAI and will use the cost method to account for its investments. For the year ended December 31, 2021, EAI reported profit of $800,000 and declared and paid $80,000 cash dividends. At December 31, 2021, EAI's common shares were traded at $50 each. How much is Power One required to record in its dividend revenue account in EAI? $132,000 $120,000 $12,000 $80,000
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The following are two independent situations.Situation 1Novak Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2020. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.Situation 2Splish, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 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 $35,400 to all stockholders. On December 31, Seles reported a net income of $91,800 for the year.Prepare all necessary journal entries in 2020 for both situations. (
BARK Corporation acquired 10,000 Company shares on February 5, 2016 at P50 which include P10 per share broker's fees and commissions, A P50,000 cash dividends were received from MEOW Company on March 20, 2016. These dividends were declared on January 5 payable to shareholders as of February 10. MEOW Company shares were split 2 for 1 on November 1. The shares were selling at P32 per share on December 31, 2016. The investments were designated as FVPL. How much should be recognized as dividend income?

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