Presented below are two independent situations.
1. Roscoe Cosmetics acquired 10% of the 200,000 shares of common stock of Ling Fashion at a total cost of $13 per share on March 18, 2002. On June 30, Ling declared and paid a $75,000 dividend. On December 31, Ling reported net income of $122,000 for the year. At December 31, the market price of Ling Fashion was $14 per share. The stock is classified as available-for-sale.
2. Juan, Inc., obtained significant influence over Orlando Corporation by buying 30% of Orlando's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2002. On June 15, Orlando declared and paid a cash dividend of $35,000. On December
31, Orlando reported a net income of $80,000 for the year.
Instructions:
Prepare all the necessary journal entries for 2002 for (a) Roscoe Cosmetics and (b) Juan, Inc.