Question

1. Gambino Cosmetics acquired 10% of the 190,000 shares ofcommon stock of Nevins Fashion at a total cost of $13 per share onMarch 18, 2017. On June 30, Nevins declared and paid a $40,000dividend. On December 31, Nevins reported net income of $112,000for the year. At December 31, the market price of Nevins Fashionwas $15 per share. The stock is classified as available-for-sale.2. Kanza, Inc., obtained significant influence over RoganCorporation by buying 40% of Rogan’s 32,000 outstanding shares ofcommon stock at a total cost of $9 per share on January 1, 2017. OnJune 15, Rogan declared and paid a cash dividend of $35,000. OnDecember 31, Rogan reported a net income of $74,000 for the year.Prepare all the necessary journal entries for 2017 for (a) GambinoCosmetics and (b) Kanza, Inc.