Suspect Company Issued $720,000 of 8 percent first mortgage bonds on January 1, 20X1, at 105. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Suspect's bonds from the original purchaser on January 1, 20X5, for $473,000. Prime owns 60 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership In preparing consolidated financial statements for 20X5. b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X6. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar. No A Event 1 Accounts Bonds payable Premium on bonds payable Interest income Gain on bond retirement Interest expense Investment in Suspect Company bonds B 2 Interest payable Interest receivable Required A Required B Show less Debit Credit
Suspect Company Issued $720,000 of 8 percent first mortgage bonds on January 1, 20X1, at 105. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Suspect's bonds from the original purchaser on January 1, 20X5, for $473,000. Prime owns 60 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership In preparing consolidated financial statements for 20X5. b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X6. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar. No A Event 1 Accounts Bonds payable Premium on bonds payable Interest income Gain on bond retirement Interest expense Investment in Suspect Company bonds B 2 Interest payable Interest receivable Required A Required B Show less Debit Credit
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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Question
Transcribed Image Text:Suspect Company Issued $720,000 of 8 percent first mortgage bonds on January 1, 20X1, at 105. The bonds mature in 20 years and
pay interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Suspect's bonds from the original
purchaser on January 1, 20X5, for $473,000. Prime owns 60 percent of Suspect's voting common stock.
Required:
a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In
preparing consolidated financial statements for 20X5.
b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In
preparing consolidated financial statements for 20X6.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in
preparing consolidated financial statements for 20X5.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
your intermediate calculations. Round your final answers to nearest whole dollar.
No
Event
A
1
Accounts
Bonds payable
Premium on bonds payable
Interest income
Gain on bond retirement
Interest expense
Investment in Suspect Company bonds
B
2
Interest payable
Interest receivable
<Required A
Required B >
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Debit
Credit
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