Presented below and on page 629 are two independent situations: 1. Lorfeld Ltd. acquired 10% of the

Question:

Presented below and on page 629 are two independent situations:
1. Lorfeld Ltd. acquired 10% of the 500,000 ordinary shares of Northbrook Enterprises at a total cost of €11 per share on June 17, 2017. On September 3, Northbrook declared and paid a €160,000 On December 31, Northbrook reported net income of €550,000 for the year
2. Saa Ltd. obtained significant influence over McCarthy Company by buying 30% of McCarthy's 100,000 outstanding ordinary shares at a cost of €18 per share on January 1, 2017. On May 15, McCarthy declared and paid a cash of €150,000. On December 31, McCarthy reported net income of €270,000 for the year.
Prepare all necessary journal entries for 2017 for (a) Lorfeld and (b) Saa.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...