Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. Atthat date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased$96,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $100,000. The bonds pay interest annually onDecember 31. The trial balances of the companies as of December 31, 20X4, are as follows:Note: Assume using straight-line amortization of bond discount or premium.ItemCash and ReceivablesInventoryBuildings and EquipmentInvestment in Soul Company StockInvestment in Soul Company BondsCost of Goods SoldDepreciation ExpenseInterest ExpenseDividends DeclaredAccumulated DepreciationCurrent PayablesBonds PayableBond PremiumCommon StockRetained EarningsSalesInterest IncomeIncome from Soul Company StockTotalPunk CorporationDebit$ 22,000168,000401,000137,01697,60073,00017,00015,76027,000$ 958,376Credit$ 122,00083,900196,000111,000233,000156,0004,96051,516$ 958,376Soul CompanyDebit$36,60093,000250,00066,80012,0004,96017,000$ 480,360CreditRequired:a. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company stock.$ 62,00067,76096,0001,60071,00041,000141,000$ 480,360

Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $96,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $100,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Note: Assume using straight-line amortization of bond discount or premium.

Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $96,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $100,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Note: Assume using straight-line amortization of bond discount or premium.

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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