The following are two independent situations.
Situation 1
Whoo Cosmetics acquired 12% of the200,000 shares of common stock of Loreal Fashion at a total cost of$15 per share on Oct. 18, 2018. On Oct. 30, Loreal declared andpaid $60,000 cash dividend to all stockholders. On December 31,Loreal reported net income of $122,000 for the year. At December31, the market price of Loreal Fashion was $12 per share.
Situation 2
Peach Republic Group obtainedsignificant influence over Old Army Corporation by buying 35% ofOld Army’s 40,000 outstanding shares of common stock at a totalcost of $16 per share on January 1, 2018. On June 15, Old Armydeclared and paid cash dividends of $58,000. On December 31, OldArmy reported a net income of $100,000 for the year.
Prepare all the necessary journalentries in 2018 for Whoo Cosmetics and Peach Republic Group.
