The following are two independent situations. Situation 1: Culver Cosmetics acquired 10% of the 191,000 shares of common stock of Martinez Fashion at a total cost of $14 per share on March 18, 2017. On June 30, Martinez declared and paid $80,900 cash dividend to all stockholders. On December 31, Martinez reported net income of $121,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share.
Situation 2: Larkspur, Inc. obtained significant influence over Sales Corporation by buying 30% of Sales’s 29,700 outstanding shares of common stock at a total cost of $10 per share on January 1, 2017. On June 15, Sales declared and paid cash dividends of $33,000. On December 31, Sales reported a net income of $79,200 for the year.
Prepare all necessary journal entries in 2017 for both situations