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Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on that date of $960,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) 2 No 1 Answer is complete but not entirely correct. Date December 31, 201 Bonds payable Accounts Loss on retirement of debt Interest income Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense 00000 Debit Credit 162,400 31,000 11,460 000 151,246 x 11,195 188,860 16,000 36,732 x 184,187 14,986 x

Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on that date of $960,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) 2 No 1 Answer is complete but not entirely correct. Date December 31, 201 Bonds payable Accounts Loss on retirement of debt Interest income Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense 00000 Debit Credit 162,400 31,000 11,460 000 151,246 x 11,195 188,860 16,000 36,732 x 184,187 14,986 x

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
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Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on that date of $960,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) 2 No 1 Answer is complete but not entirely correct. Date December 31, 201 Bonds payable Accounts Loss on retirement of debt Interest income Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense 00000 Debit Credit 162,400 31,000 11,460 000 151,246 x 11,195 188,860 16,000 36,732 x 184,187 14,986 x
Transcribed Image Text:Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on that date of $960,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) 2 No 1 Answer is complete but not entirely correct. Date December 31, 201 Bonds payable Accounts Loss on retirement of debt Interest income Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense 00000 Debit Credit 162,400 31,000 11,460 000 151,246 x 11,195 188,860 16,000 36,732 x 184,187 14,986 x
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