Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a...

 

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Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2025. On June 30, Martinez declared and paid $75,000 cash dividends to all stockholders. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2025. On June 15, Seles declared and paid cash dividends of $36,000 to all stockholders. On December 31, Seles reported a net income of $85,000 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 titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit ituation 1: Conchita Cosmetics Mar. 18, 2025 Cash June 30, 2025 Cash Dec. 31, 2025 Dividend Revenue Unrealized Holding Gain or Loss - Income ituation 2: Monica, Inc Jan. 1, 2025 Cash June 15, 2025 Cash Dec. 31, 2025 Investment Income 260000 7500 40000 81000 10800 25500 Credit 260000 7500 40000 81000 10800 25500 On January 1, 2025, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Your answer is partially correct. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2026. (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 titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 1,225.25.) Date Account Titles and Explanation Dec. 31, 2026 Interest Revenue Debt Investments Debit 36000 Credit Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2025. On June 30, Martinez declared and paid $75,000 cash dividends to all stockholders. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2025. On June 15, Seles declared and paid cash dividends of $36,000 to all stockholders. On December 31, Seles reported a net income of $85,000 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 titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit ituation 1: Conchita Cosmetics Mar. 18, 2025 Cash June 30, 2025 Cash Dec. 31, 2025 Dividend Revenue Unrealized Holding Gain or Loss - Income ituation 2: Monica, Inc Jan. 1, 2025 Cash June 15, 2025 Cash Dec. 31, 2025 Investment Income 260000 7500 40000 81000 10800 25500 Credit 260000 7500 40000 81000 10800 25500 On January 1, 2025, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.44. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and mature January 1, 2030, with interest received on January 1 of each year. Hi and Lois Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Your answer is partially correct. Prepare the journal entry to record the interest revenue and the amortization at December 31, 2026. (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 titles and enter O for the amounts. Round answers to 2 decimal places, e.g. 1,225.25.) Date Account Titles and Explanation Dec. 31, 2026 Interest Revenue Debt Investments Debit 36000 Credit