E12-8 Presented below are two independent situations. -- E12-8 Gambino & Kanza, Inc

E12-8. Presented below are two independent situations.

E12-8 Gambino & Kanza, Inc

Gambino Cosmetics acquired 10% of the 200,000 shares of common stock of Nevins Fashion at a total cost of $13 per share on March 18, 2015. On June 30, Nevins declared and paid a $60,000 dividend. On December 31, Nevins reported net income of $122,000 for the year. At December 31, the market price of Nevins Fashion was $15 per share. The stock is classified as available-for-sale.

Kanza, Inc., obtained significant influence over Rogan Corporation by buying 40% of Rogan’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2015. On June 15, Rogan declared and paid a cash dividend of $30,000. On December 31, Rogan reported a net income of $80,000 for the year.

 

Instructions
Prepare all the necessary journal entries for 2015 for (a) Gambino Cosmetics and (b) Kanza, Inc.
 

 TUTORIAL PREVIEW

(a)

2015

Mar. 18            Stock Investments..........................................            260,000

Cash (200,000 X 10% X $13)...............                                 260,000

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