On October 1,2021 Steve Company borrowed $500,000 from its parent, Pam Company, at an annual interest rate of 5%, with interest payable semiannually on March 31 and September 30. The note’s principle is due in 5 years.     Required;   a. What balances appear in the December 31, 2021 trial balances of Pam Company and Steve      Company with respect to this intercompany loan?   b. What balances should appear on the consolidated financial statements of Pam Company      and Steve Company with respect to this intercompany loan?   c. Prepare the December 31, 2021 elimination entries needed for this intercompany loan.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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On October 1,2021 Steve Company borrowed $500,000 from its parent, Pam Company, at an annual
interest rate of 5%, with interest payable semiannually on March 31 and September 30. The note’s
principle is due in 5 years.
 
 
Required;
 
a. What balances appear in the December 31, 2021 trial balances of Pam Company and Steve
     Company with respect to this intercompany loan?
 
b. What balances should appear on the consolidated financial statements of Pam Company
     and Steve Company with respect to this intercompany loan?
 
c. Prepare the December 31, 2021 elimination entries needed for this intercompany loan.
 

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