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Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies. Required: Prepare the necessary consolidation working paper entries on December 31, 2014 with respect to the intercompany bonds.

Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies. Required: Prepare the necessary consolidation working paper entries on December 31, 2014 with respect to the intercompany bonds.

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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Paka Corporation owns an 80% interest in Sandra Company. Paka acquired Sandra's bonds on January 2, 2014. The following information is from the adjusted trial balances at December 31, 2014, at which time the bonds have three years to maturity. The bonds have interest payment dates of January 1 and July 1. Straight-line amortization is used by both companies.

Required:
Prepare the necessary consolidation working paper entries on December 31, 2014 with respect to the intercompany bonds.

Paka Sandra Investment in Sandra Bonds, $100,000 par 98,500 7% Bonds payable, $200,000 Bond premium 200,000 6,000 Interest expense 12,000 Interest receivable 7,000 Interest income 7,500 Interest payable 7,000
Transcribed Image Text:Paka Sandra Investment in Sandra Bonds, $100,000 par 98,500 7% Bonds payable, $200,000 Bond premium 200,000 6,000 Interest expense 12,000 Interest receivable 7,000 Interest income 7,500 Interest payable 7,000
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