Exercise 12-8 Presented below are two independent situations. Prepare all the ne
ID: 2599993 • Letter: E
Question
Exercise 12-8
Presented below are two independent situations.
Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
No.
Date
Account Titles and Explanation
Debit
Credit
1. Gambino Cosmetics acquired 15% of the 296,900 shares of common stock of Nevins Fashion at a total cost of $11 per share on March 18, 2015. On June 30, Nevins declared and paid a $54,500 dividend. On December 31, Nevins reported net income of $117,890 for the year. At December 31, the market price of Nevins Fashion was $13 per share. The stock is classified as available-for-sale. 2. Kanza, Inc., obtained significant influence over Rogan Corporation by buying 30% of Rogan’s 20,300 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $21,700. On December 31, Rogan reported a net income of $83,700 for the year.Explanation / Answer
A) Journal Entries Accounting titles & Explanations Debit Credit 18-Mar Available-for sale securities 489885 Cash 489,885 (296900*15%)*11 30-Jun cash 8175 dividend income 8,175 (54500*15%) 31-Dec Securities Fair value adjustment (Available- for sale) 89070 Unrealized holding gain or loss-Equity 89,070 (13-11)*44535 B) Accounting titles & Explanations Debit Credit 1-Jan investment in Rogan Corporation 54810 cash 54,810 (20300*30%*9) 15-Jun Cash 6510 investment in rogan corporation 6,510 (21,700*30%) 31-Dec investment in Rogan corporation 25110 investment income 25,110 (83700*30%)
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