N1.Account Plug Corporation purchased $100,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from LemonCorporation for $102,800. The 10-year bonds bear a 9 percent coupon rate, and Spark originally sold them on January 1, 20X3, toLemon at 95. Interest is paid annually on December 31. Plug owns 85 percent of the stock of Spark.In preparing the consolidation worksheet at December 31, 20X6, Plug's controller made the following entry to eliminate the effects ofthe intercorporate bond ownership:Consolidation Worksheet EntriesBonds PayableInterest IncomeRetained Earnings, January 1Noncontrolling InterestInvestment in Spark Company BondsDiscount on Bonds PayableInterest ExpenseRequired:With the information given, answer the following questions:ADebit100,0008,6915,7411,013Show Transcribed TextNoRequired:With the information given, answer the following questions:Event1a. Prepare the journal entry made by Plug in 20X6 to record its interest income on the Spark bonds that it holds. (If nrequired for a transaction/event, select "No journal entry required" in the first account field. Do not round your incalculations. Round your final answers to nearest whole dollar.)Credit102,4913,5359,419X Answer is not complete.CashInvestment in Spark Company bondsInterest incomeGeneral JournalDebitCredit8,691 b. Prepare the consolidation entry to remove the effects of the intercorporate bond ownership in completing a three-part consolidationworksheet at December 31, 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the firstaccount field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.)NoAEvent1Answer is not complete.Bonds payableLoss on bond retirementInvestment in Spark Company bondsDiscount on bonds payableConsolidated net incomeIncome to controlling interestAccounts20X5Debit100,000c. Spark reported net income of $60,000 and $80,000 for 20X5 and 20X6, respectively. Plug reported income from its separateoperations of $120,000 and $150,000 for 20x5 and 20X6, respectively. What amount of consolidated net income and income to thecontrolling interest will be reported in the consolidated income statements for 20x5 and 20X6? (Do not round your intermediatecalculations. Round your final answers to nearest whole dollar.)20X6Credit102,906 x

A journal entry is a form of accounting entry that is used to report a business transaction in a…

Plug Corporation purchased $100,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from Lemon Corporation for $102,800. The 10-year bonds bear a 9 percent coupon rate, and Spark originally sold them on January 1, 20X3, to Lemon at 95. Interest is paid annually on December 31. Plug owns 85 percent of the stock of Spark. In preparing the consolidation worksheet at December 31, 20X6, Plug's controller made the following entry to eliminate the effects of the intercorporate bond ownership: Consolidation Worksheet Entries Bonds Payable Interest Income Retained Earnings, January 1 Noncontrolling Interest Investment in Spark Company Bonds Discount on Bonds Payable Interest Expense Debit 100,000 8,691 5,741 1,013 Required: With the information given, answer the following questions: Credit 102,491 3,535 9,419

Plug Corporation purchased $100,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from Lemon Corporation for $102,800. The 10-year bonds bear a 9 percent coupon rate, and Spark originally sold them on January 1, 20X3, to Lemon at 95. Interest is paid annually on December 31. Plug owns 85 percent of the stock of Spark. In preparing the consolidation worksheet at December 31, 20X6, Plug's controller made the following entry to eliminate the effects of the intercorporate bond ownership: Consolidation Worksheet Entries Bonds Payable Interest Income Retained Earnings, January 1 Noncontrolling Interest Investment in Spark Company Bonds Discount on Bonds Payable Interest Expense Debit 100,000 8,691 5,741 1,013 Required: With the information given, answer the following questions: Credit 102,491 3,535 9,419

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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