Presented below are two independent situations. 1. Heath Cosmetics acquired 15% of the 200,000 shares of common stock of Van Fashion at a total cost of $13 per share on March 18, 2010. On June 30,Van declared and paid a $60,000 dividend. On December 31,Van reported net income of $122,000 for the year. At December 31, the market price of

Chapter 16, Exercises #8

Presented below are two independent situations.

1. Heath Cosmetics acquired 15% of the 200,000 shares of common stock of Van Fashion at a total cost of $13 per share on March 18, 2010. On June 30,Van declared and paid a $60,000 dividend. On December 31,Van reported net income of $122,000 for the year. At December 31, the market price of Van Fashion was $15 per share. The stock is classified as available for sale.

2. Yoder, Inc., obtained significant influence over Parks Corporation by buying 30% of Parks 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2010.

On June 15, Parks declared and paid a cash dividend of $30,000. On December 31, Parks reported a net income of $80,000 for the year.

Instructions

Prepare all the necessary journal entries for 2010 for

(1) Heath Cosmetics and

(2) Yoder, Inc.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...