4. (16 points) (LO3) Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies. Paka Sandra Investment in Sandra Bonds, $100,000 par 98,500 7% Bonds payable, $200,000 Bond premium 200,000 6,000 12,000 Interest expense Interest receivable 7,000 Interest income 7,500 Interest payable 7,000
4. (16 points) (LO3) Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies. Paka Sandra Investment in Sandra Bonds, $100,000 par 98,500 7% Bonds payable, $200,000 Bond premium 200,000 6,000 12,000 Interest expense Interest receivable 7,000 Interest income 7,500 Interest payable 7,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![4. (16 points) (LO3) Paka Corporation owns an 80% interest in Sandra Company. Paka acquired
Sandra's bonds on January 2, 2014. The following information is from the adjusted trial
balances at December 31, 2014, at which time the bonds have three years to maturity. The
bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used
by both companies.
Paka
Sandra
Investment in Sandra Bonds, $100,000 par 98,500
7% Bonds payable, $200,000
200,000
Bond premium
6,000
12,000
Interest expense
Interest receivable
7,000
7,500
Interest income
Interest payable
7,000
Required:
Prepare the necessary consolidation working paper entries on December 31, 2014 with
respect to the intercompany bonds.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa232bb5c-8eb5-4398-823e-ef7d8bf77344%2Ffdf0798e-09d7-442b-90c0-e2f7e745ca98%2Fv7uhkrc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. (16 points) (LO3) Paka Corporation owns an 80% interest in Sandra Company. Paka acquired
Sandra's bonds on January 2, 2014. The following information is from the adjusted trial
balances at December 31, 2014, at which time the bonds have three years to maturity. The
bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used
by both companies.
Paka
Sandra
Investment in Sandra Bonds, $100,000 par 98,500
7% Bonds payable, $200,000
200,000
Bond premium
6,000
12,000
Interest expense
Interest receivable
7,000
7,500
Interest income
Interest payable
7,000
Required:
Prepare the necessary consolidation working paper entries on December 31, 2014 with
respect to the intercompany bonds.
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