Reference no: EM132494114

Question - The following are two independent situations.

Situation 1 - Marigold Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2017. On June 30, Martinez declared and paid $73,300 cash dividend to all stockholders. On December 31, Martinez reported net income of $131,600 for the year. At December 31, the market price of Martinez Fashion was $15 per share.

Situation 2 - Swifty, Inc. obtained significant influence over Seles Corporation by buying 40% of Seles's 32,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $32,800. On December 31, Seles reported a net income of $89,100 for the year.

Required - Prepare the necessary journal entries in 2017 for both situations.