Answer:
Riverbed Cosmetics and Martinez Fashion
March 18, 2020:
Debit Investment in Martinez Fashion $2,580,000
Credit Cash $2,580,000
To record the acquisition of 10% of the 215,000 shares of common stock
June 30, 2020:
Debit Cash $7,400
Credit Dividend Income $7,400
To record dividend income received ($74,000 * 10%).
December 31, 2020:
Debit Investment in Martinez Fashion $215,000
Credit Unrealized Gain $215,000
To record the unrealized gain from the increase in share price.
Situation 2:
Marin, Inc. and Seles Corporation
January 1, 2020:
Debit Investment in Seles Corporation $84,510
Credit Cash $84,510
To record the 30% of Seles's 31,300 shares acquired at a total cost of $9 per share.
June 15, 2020:
Debit Cash $10,980
Credit Investment in Seles Corporation $10,980
To record the 30% of $36,600 dividends paid to all stockholders.
December 31, 2020:
Debit Investment in Seles Corporation $24,030
Credit Retained Earnings $24,030
To record the company's share of the net income.
Explanation:
a) Data and Analysis:
Riverbed Cosmetics and Martinez Fashion
March 18, 2020: Investment in Martinez Fashion $2,580,000 Cash $2,580,000 10% of the 215,000 shares of common stock
June 30, 2020: Cash $7,400 Dividend Income $7,400 ($74,000 * 10%)
December 31, 2020: Investment in Martinez Fashion $215,000 Unrealized Gain $215,000
Situation 2:
Marin, Inc. and Seles Corporation
January 1, 2020: Investment in Seles Corporation $84,510 Cash $84,510
30% of Seles's 31,300 outstanding shares of common stock at a total cost of $9 per share
June 15, 2020: Cash $10,980 Investment in Seles Corporation $10,980
30% of $36,600 paid to all stockholders.
December 31, 2020: Investment in Seles Corporation $24,030 Retained Earnings $24,030