Pretzel Corporation owns 60 percent of Stick Corporation's voting shares. On January 1, 20X2, Pretzel Corporation sold $160,000 par value, 10 percent first mortgage bonds to Stick for $166,000. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. a. Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzel's bonds. b. Prepare the journal entries for 20X2 for Pretzel related to the bonds. c. Prepare the worksheet consolidation entries needed on December 31, 20X2, to remove the effects of the intercorporate ownership of bonds.

Pretzel Corporation owns 60 percent of Stick Corporation's voting shares. On January 1, 20X2, Pretzel Corporation sold $160,000 par value, 10 percent first mortgage bonds to Stick for $166,000. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. a. Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzel's bonds. b. Prepare the journal entries for 20X2 for Pretzel related to the bonds. c. Prepare the worksheet consolidation entries needed on December 31, 20X2, to remove the effects of the intercorporate ownership of bonds.

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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Applegate Corporation sells $170,000, 9%, 20-year bonds for 96 on January 1. Interest is paid on January 1 and July 1. Straight-line amortization is used. The amount of interest expense recorded on July 1, six months after issuance is:
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Petal Corporation acquires Treetop Inc's $100,000, 3-year, 5% bonds on January 1, 2021. The bonds pay interest on January 1 and July 1 each year. The bonds were issued to yield 4%. How much will the investment account be debited by on January 1, 2021? O $99,500 O $100,000 O $102,500 O $102,801
) Soap Company issued $200,000 of 8%, 5-year bonds on January 1, 20X6. The discount on issuance was $12,000. Bond interest is paid annually on December 31. On December 31, 20X8, Pumice Company purchased one-half of the outstanding bonds for $96,000. Both companies use the straight-line method of amortization. checked How much interest expense will appear on the December 31, 20X9, consolidated income statement? a. $18,400 b. $16,000 c. $9,200 d. $8,000
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