Par Corporation holds 60 percent of Short Publishing Company’s voting shares. Par issued $550,000 of 10 percent bonds with a 10-year maturity on January 1, 20X2, at 94. On January 1, 20X8, Short purchased $110,000 of the Par bonds for $116,000. Partial trial balances for the two companies on December 31, 20X8, are as follows: Note: Assume using straight-line amortization of bond discount or premium. ParCorporationShortPublishing CompanyInvestment in Short Publishing Company Stock$138,000 Investment in Par Corporation Bonds $115,500 Bonds Payable 550,000 Discount on Bonds Payable 18,000 Interest Expense 50,000 Interest Income 9,100 Interest Payable 20,000 Interest Receivable 5,500 Required:Prepare the worksheet consolidation entry or entries needed on December 31, 20X8, to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements.Record the entry to eliminate the effects of the intercompany ownership in bonds for 20X8. Record the entry to eliminate the intercompany interest receivables/payables for 20X8.

In a consolidated financial statement, the transactions between the parent and subsidiary entity are…

Answered: Par Corporation holds 60 percent of…

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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Par Corporation holds 60 percent of Short Publishing Company’s voting shares. Par issued $550,000 of 10 percent bonds with a 10-year maturity on January 1, 20X2, at 94. On January 1, 20X8, Short purchased $110,000 of the Par bonds for $116,000. Partial trial balances for the two companies on December 31, 20X8, are as follows:

Note: Assume using straight-line amortization of bond discount or premium.

	Par Corporation	Short Publishing Company
Investment in Short Publishing Company Stock	$	138,000
Investment in Par Corporation Bonds			$	115,500
Bonds Payable		550,000
Discount on Bonds Payable		18,000
Interest Expense		50,000
Interest Income				9,100
Interest Payable		20,000
Interest Receivable				5,500

Required:
Prepare the worksheet consolidation entry or entries needed on December 31, 20X8, to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements.

Record the entry to eliminate the effects of the intercompany ownership in bonds for 20X8.

Record the entry to eliminate the intercompany interest receivables/payables for 20X8.

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