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1. Chicory Cosmetics acquired 15% of the 262,800 shares of common stock of Racine Fashion at a total cost of $11 per share on March 18, 2012. On June 30, Racine declared and paid a $51,100 dividend. On December 31, Racine reported net income of $121,410 for the year. At December 31, the market price of Racine Fashion was $13 per share. The stock is classified as available-for-sale.

2. Frank, Inc., obtained significant influence over Nowak Corporation by buying 30% of Nowak’s 28,300 outstanding shares of common stock at a total cost of $6 per share on January 1, 2012. On June 15, Nowak declared and paid a cash dividend of $31,400. On December 31, Nowak reported a net income of $76,200 for the year.

 

Prepare all the necessary journal entries for 2012 for (1) Chicory Cosmetics and (2) Frank, Inc

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