Situation 1 bridgeport cosmetics acquired 10% of the 184,000 shares of common stock of martinez fashion at a total cost of $13 per share on march 18, 2020. on june 30, martinez declared and paid $69,400 cash dividend to all stockholders. on december 31, martinez reported net income of $113,000 for the year. at december 31, the market price of martinez fashion was $14 per share.

situation 2 indigo, inc. obtained significant influence over seles corporation by buying 30% of seles’s 31,400 outstanding shares of common stock at a total cost of $9 per share on january 1, 2020. on june 15, seles declared and paid cash dividends of $39,100 to all stockholders. on december 31, seles reported a net income of $85,000 for the year.

required:

1. prepare all necessary journal entries in 2020 for both situations.

Blue computers, a major pc manufacturer in the united states, currently has plants in kentucky and pennsylvania. the kentucky plant has a capacity of 1 million units a year and the pennsylvania plant has a capacity of 1.5 million units a year. the firm divides the united states into five markets: northeast, southeast, midwest, south, and west. each pc sells for $1,000. the firm anticipates a 50 perc~nt growth in demand (in each region) this year (after which demand will stabilize) and wants to build a plant with a capacity of 1.5 million units per year to accommodate the growth. potential sites being considered are in north carolina and california. currently the firm pays federal, state, and local taxes on the income from each plant. federal taxes are 20 percent of income, and all state and local taxes are 7 percent of income in each state. north carolina has offered to reduce taxes for the next 10 years from 7 percent to 2 percent. blue computers would like to take the tax break into consideration when planning its network. consider income over the next 10 years in your analysis. assume that all costs remain unchanged over the 10 years. use a discount factor of 0.1 for your analysis. annual fixed costs, production and shipping costs per unit, and current regional demand (before the 50 percent growth) are shown in table 5-13. (a) if blue computers sets an objective of minimizing total fixed and variable costs, where should they build the new plant? how should the network be structured? (b) if blue computers sets an objective of maximizing after-tax profits, where should they build the new plant? how should the network be structured? variable production and shipping cost ($/unit) annual fixed cost northeast southeast midwest south west (million$) kentucky 185 180 175 175 200 150 pennsylvania 170 190 180 200 220 200 n. carolina 180 180 185 185 215 150 california 220 220 195 195 175 150 demand ('000 units/month) 700 400 400 300 600