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E17-12B (Journal Entries for Fair Value and Equity Methods) Presented below are two independent situations. Situation 1 People Tables acquired 15% of the 5,000,000 shares of common stock of Robot Sofas at a total cost of $8.50 per share on April 1, 2014.

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E17-12B (Journal Entries for Fair Value and Equity Methods) Presented below are two independent situations.;Situation 1;People Tables acquired 15% of the 5,000,000 shares of common stock of Robot Sofas at a total cost of $8.50 per share on April 1, 2014. On August 8, Robot Sofas declared and paid a $250,000 cash dividend. On December 31, Robot Sofas market price was $9.00 per share and the company reported net income of $685,000 for the year. The securities are classified as available-for-sale.;Situation 2;On January 1, 2014, Mica Company purchased 40% of Santos Corporation 500,000 outstanding shares of common stock at a total cost of $13 per share. On October 25, Santos declared and paid a cash dividend of $0.40 per share. On December 31, Santos reported a net income of $860,000 for the year and the market price of its common stock was $14 per share.;Instructions;Prepare all necessary journal entries in 2012 for both situations.

 

Paper#78455 | Written in 18-Jul-2015

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