Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on that date of $960,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) No 1 2 Answer is not complete. Accounts Date December 31, 201 Bonds payable Interest income Loss on retirement of debt Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense Debit 1,976,000 X 11,460 210,536 X 11,196 Credit 1,000 188,860 19,200 17,168 X 184,187 20,377 X

Several years ago Brant, Inc., sold $1,020,000 in bonds to the public. Annual cash interest of 8 percent ($81,600) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $170,000 of these bonds on the open market for $191,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on that date of $960,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to nearest whole number.) No 1 2 Answer is not complete. Accounts Date December 31, 201 Bonds payable Interest income Loss on retirement of debt Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense Debit 1,976,000 X 11,460 210,536 X 11,196 Credit 1,000 188,860 19,200 17,168 X 184,187 20,377 X

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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