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Financial Accounting

Presented below are two independent situations.
1. Roscoe Cosmetics acquired 10% of the 200,000 shares of common stock of Ling Fashion
at a total cost of $13 per share on March 18, 2002. On June 30, Ling declared and paid a
$75,000 dividend. On December 31, Ling reported net income of $122,000 for the year. At
December 31, the market price of Ling Fashion was $14 per share. The stock is classified
as available-for-sale.
2. Juan, Inc., obtained significant influence over Orlando Corporation by buying 30% of Orlando's
30,000 outstanding shares of common stock at a total cost of $9 per share on January
1, 2002. On June 15, Orlando declared and paid a cash dividend of $35,000. On December
31, Orlando reported a net income of $80,000 for the year.
Prepare all the necessary journal entries for 2002 for (a) Roscoe Cosmetics and (b) Juan,

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Solution Preview

Hi there,
<br>Here are your entries:
<br>March 18, 2002
<br>10% X 200,000 X $13 = 360,000
<br>DR: Common stock 360,000
<br>CR: Cash 360,000
<br>June 30, 2002 - Payment of dividend
<br>DR: Dividend payment 75,000
<br>CR: ...

Solution Summary

This problem involves the fundamentals of accounting