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. Required: 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzel's bonds. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar. No Date January 1, 20X2 General Journal Investment in Pretzel Corporation bonds Cash Debit Credit 166,000 166,000 2 July 1, 20X2 Cash 8,000 Interest income 7,700 Investment in Pretzel Corporation bonds 300 x 3 December 31, 20X Interest receivable Interest income Investment in Pretzel Corporation bonds Required B> 8,000 7,579 421 x
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. Required: 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzel's bonds. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar. No Date January 1, 20X2 General Journal Investment in Pretzel Corporation bonds Cash Debit Credit 166,000 166,000 2 July 1, 20X2 Cash 8,000 Interest income 7,700 Investment in Pretzel Corporation bonds 300 x 3 December 31, 20X Interest receivable Interest income Investment in Pretzel Corporation bonds Required B> 8,000 7,579 421 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text: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.
Required:
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.
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A Required B
Required C
Prepare the jourxial entries for 20X2 for Stick related to its ownership of Pretzel's bonds.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
your Intermediate calculations. Round your final answers to nearest whole dollar.
No
Data
General Journal
January 1, 20X2
Investment in Pretzel Corporation bonds
Cash
3
July 1, 20X2
Cash
Interest income
Investment in Pretzel Corporation bonds
December 31, 20X Interest receivable
Interest income
Investment in Pretzel Corporation bonds
Required B
609
Debit
166,000
Credit
166,000
8,000
7,700
300 x
8,000
7,579
121
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