These are two independent situations:
1. Angel Cosmetics acquired 12% of the 300,000 shares of common stock of Chic Fashion at a total cost of $14 per share on March 18, 2012. On June 30, Chic declared and paid a $75,000 dividend. On December 31, Chic reported net income of $244,000 for the year. At December 31, the market price of Chic Fashion was $16 per share.
The stock is classified as available-for-sale.
2. Randell Inc. obtained significant influence over Gatos Corporation by buying 25% of Gatos’s 30,000 outstanding shares of common stock at a total cost of $11 per share on January 1, 2012. On June 15, Gatos declared and paid a cash dividend of $35,000. On December 31, Gatos reported a net income of $120,000 for the year. Instructions
Prepare all the necessary journal entries for 2012 for
(a) Angel Cosmetics and
(b) Randell Inc.