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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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.) No A B Event 1 2 Bonds payable Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement Interest payable Answer is complete and correct. Accounts Interest receivable Debit 400,000 0,000 18,000 Credit 397,000 12,000 18,000 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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.)

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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.) No A B Event 1 2 Bonds payable Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement Interest payable Answer is complete and correct. Accounts Interest receivable Debit 400,000 0,000 18,000 Credit 397,000 12,000 18,000 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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Suspect Company Issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock. Note: Assume using straight-line amortization of bond discount or premium. 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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.) No A 00 B No A Event 1 B 2 Event 1 2 Bonds payable Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement Interest payable Interest receivable Answer is complete and correct. Accounts 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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.) Answer is complete but not entirely correct. Bonds payable Premium on bonds payable Interest income Interest payable Investment in Suspect Company bonds Interest expense Investment in Suspect Co. NCI in NA of Suspect Co. Interest receivable Accounts Debit 400,000 9,000 18,000 Debit 400,000 8,400 36,200 Credit 18,000 397,000 12,000 18,000 Credit 397,200 6,750 6,800 x 4,800 18,000
Transcribed Image Text:Suspect Company Issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock. Note: Assume using straight-line amortization of bond discount or premium. 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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.) No A 00 B No A Event 1 B 2 Event 1 2 Bonds payable Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement Interest payable Interest receivable Answer is complete and correct. Accounts 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. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account fleld.) Answer is complete but not entirely correct. Bonds payable Premium on bonds payable Interest income Interest payable Investment in Suspect Company bonds Interest expense Investment in Suspect Co. NCI in NA of Suspect Co. Interest receivable Accounts Debit 400,000 9,000 18,000 Debit 400,000 8,400 36,200 Credit 18,000 397,000 12,000 18,000 Credit 397,200 6,750 6,800 x 4,800 18,000
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