ACC Question2

Situation 1
Hatcher Cosmetics acquired 10% of the 206,400 shares of common stock of Ramirez Fashion at a total cost of $14 per share on March 18, 2012. On June 30, Ramirez declared and paid a $84,100 cash dividend. On December 31, Ramirez reported net income of $125,200 for the year. At December 31, the market price of Ramirez Fashion was $15 per share. The securities are classified as available-for-sale.

Situation 2
Holmes, Inc. obtained significant influence over Nadal Corporation by buying 26% of Nadal’s 32,900 outstanding shares of common stock at a total cost of $11 per share on January 1, 2012. On June 15, Nadal declared and paid a cash dividend of $41,100. On December 31, Nadal reported a net income of $86,100 for the year.

Prepare all necessary journal entries in 2012 for both situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Hatcher Cosmetics
March 18, 2012	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
June 30, 2012	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
Dec. 31, 2012	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
Holmes Inc.
Jan. 1, 2012	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
June 15, 2012	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]
Dec. 31, 2012	[removed]	[removed]	[removed]
	[removed]	[removed]	[removed]