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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
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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