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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 $88,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $92,000. 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 $88,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $92,000. 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
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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Need help with part D and E Please
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 $88,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $92,000. 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. Item Cash and Receivables Inventory Buildings and Equipment Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense. Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings Sales Interest Income Income from Soul Company Stock Total Punk Corporation Debit $ 41,000 167,000 418,000 147,348 89,600 67,000 19,000 15,280 29,000 $ 993,228 Credit $ 135,000 118,500 188,000 119,000 230,000 149,000 4,480 49,248 $ 993,228 Soul Company Debit $ 55,600 89,000 252,000 60,800 14,000 4,480 19,000 $ 494,880 Credit $ 75,000 68,280 88,000 1,600 79,000 49,000 134,000 $ 494,880 Required: a. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company stock. b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. c. Prepare the journal entry or entries for 20X4 on Soul's books related to its bonds payable. d. Prepare the consolidation entries needed to complete a consolidated worksheet for 20X4. e. Prepare a three-part consolidated worksheet for 20X4.
Transcribed Image Text: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 $88,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $92,000. 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. Item Cash and Receivables Inventory Buildings and Equipment Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense. Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings Sales Interest Income Income from Soul Company Stock Total Punk Corporation Debit $ 41,000 167,000 418,000 147,348 89,600 67,000 19,000 15,280 29,000 $ 993,228 Credit $ 135,000 118,500 188,000 119,000 230,000 149,000 4,480 49,248 $ 993,228 Soul Company Debit $ 55,600 89,000 252,000 60,800 14,000 4,480 19,000 $ 494,880 Credit $ 75,000 68,280 88,000 1,600 79,000 49,000 134,000 $ 494,880 Required: a. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company stock. b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. c. Prepare the journal entry or entries for 20X4 on Soul's books related to its bonds payable. d. Prepare the consolidation entries needed to complete a consolidated worksheet for 20X4. e. Prepare a three-part consolidated worksheet for 20X4.
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