Homework SourseQuestion 3 These are two independent situations Prepare all
Question 3
These are two independent situations:
Prepare all the necessary journal entries for 2017 for (a) Sosey Cosmetics and (b) Williams Inc. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
2017
1. Sosey Cosmetics
Date
Account Titles and Explanation
Debit
Credit
2. Williams Inc.
Date
Account Titles and Explanation
Debit
Credit
List Of Accounts
Question 3
| 1. | Sosey Cosmetics acquired 12% of the 182,000 shares of common stock of Elite Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Elite declared and paid a $46,500 dividend. On December 31, Elite reported net income of $232,000 for the year. At December 31, the market price of Elite Fashion was $14 per share. The stock is classified as available-for-sale. | ||
| 2. | Williams Inc. obtained significant influence over Kasey Corporation by buying 25% of Kasey’s 22,800 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Kasey declared and paid a cash dividend of $36,700. On December 31, Kasey reported a net income of $129,000 for the year. |
Solution
a) Journal entries for Sosey Cosmetics (Amounts in $)
b) Journal entries for Williams Inc. (Amounts in $)
| Date | Account Titles and Explanation | Debit | Credit |
| Mar. 18 | Short-term Investments (182,000 shares*12%*$12) | 262,080 | |
| Cash | 262,080 | ||
| June 30 | Cash ($46,500*12%) | 5,580 | |
| Dividend Revenue | 5,580 | ||
| Dec. 31 | Fair Value Adjustment-Available-For-Sale [182,000*12%*($14-$12)] | 43,680 | |
| Unrealized Gain or Loss - Equity | 43,680 |
