On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond

On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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Bula Investments acquired $260,400 of Effenstein Corp., 10% bonds at their face amount on October 1, 20Y1. The bonds pay interest on October 1 and April 1. On April 1, 20Y2, Bula sold $67,600 of Effenstein Corp. bonds at 103. Required: Journalize the entries to record the following: a. The initial acquisition of the Effenstein Corp. bonds on October 1, 20Y1.* b. The adjusting entry for 3 months of accrued interest earned on the Effenstein Corp. bonds on December 31, 20Y1.* c. The receipt of semiannual interest on April 1, 20Y2.* d. The sale of $67,600 of Effenstein Corp. bonds on April 1, 20Y2, at 103.* e. The receipt of the face value of the remaining bonds at their maturity on October 1, 20Y8.*
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