j Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago onthe date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connectionwith the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.On January 1, 2017, Hamilton sold $1,700,000 in 10-year bonds to the public at 105. The bonds had a cash interest rateof 10 percent payable every December 31. Cairns acquired 35 percent of these bonds at 96 percent of face value onJanuary 1, 2019. Both companies utilize the straight-line method of amortization.Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the followingdates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)a. December 31, 2019b. December 31, 2020c. December 31, 2021No123DateDecember 31, 201 Bonds payablePremium on bonds payableInterest incomeAnswer is not complete.AccountsInvestment in bondsInterest expenseGain on retirement of bondsDecember 31, 202 Bonds payablePremium on bonds payableInterest incomeInvestment in bondsInvestment in HamiltonDecember 31, 202 Bonds payablePremium on bonds payableInterest incomeInvestment in bondsInterest expenseInvestment in HamiltonDuuHMardDebit595,00020,825Credit

Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.