Acc557 Financial Accounting: E12-8 Presented below are two independent situations

Acc557 Financial Accounting

EXERCISE 12-8
Presented below are two independent situations.
1. Chicory Cosmetics acquired 15% of the 200,000 shares of common stock of Racine Fashion at a total cost of $13 per share on March 18, 2014. On June 30,Racine declared and paid a $60,000 dividend. On December 31,Racine reported net income of $122,000 for the year. At December 31, the market price of Racine Fashion was $15 per share. The stock is classified as non-trading.
2. Frank, Inc., obtained significant influence over Nowak Corporation by buying 30% of Nowak’s 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2014. On June 15, Nowak declared and paid a cash dividend of $30,000. On December 31, Nowak reported a net income of $80,000 for the year.

Instructions:
Prepare all the necessary journal entries for 2014 for (a) Chicory Cosmetics and (b) Frank, Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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