On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond
On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond
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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![On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidlary). On January 2. 20x2.
Senn Co. purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate
Theses bonds had been issued ot per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn
Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. Interests are paid annually.
Senn Co, uses effective interest method for interest income calculation
Q1. Please complete the following consolidation entry at December 31, 20x2.
Account
Debit
Credit
Interest Income
Bonds payable
Interest expense
Investment in Penn Bond
Gain on retiment
Q2. What is the consolidated net income?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F60381814-03a7-48e5-a79c-66b5133ac213%2Ffe44d4c6-d609-4d8a-8f4a-d7ab21f20f89%2Fwihishd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidlary). On January 2. 20x2.
Senn Co. purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate
Theses bonds had been issued ot per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn
Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. Interests are paid annually.
Senn Co, uses effective interest method for interest income calculation
Q1. Please complete the following consolidation entry at December 31, 20x2.
Account
Debit
Credit
Interest Income
Bonds payable
Interest expense
Investment in Penn Bond
Gain on retiment
Q2. What is the consolidated net income?
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