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.) 2 No 1 Answer is complete but not entirely correct. Date December 31, 201 Bonds payable Accounts Loss on retirement of debt Interest income Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense 00000 Debit Credit 162,400 31,000 11,460 000 151,246 x 11,195 188,860 16,000 36,732 x 184,187 14,986 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.) 2 No 1 Answer is complete but not entirely correct. Date December 31, 201 Bonds payable Accounts Loss on retirement of debt Interest income Investment in bonds Interest expense December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense 00000 Debit Credit 162,400 31,000 11,460 000 151,246 x 11,195 188,860 16,000 36,732 x 184,187 14,986 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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.)
2
No
1
Answer is complete but not entirely correct.
Date
December 31, 201 Bonds payable
Accounts
Loss on retirement of debt
Interest income
Investment in bonds
Interest expense
December 31, 202 Bonds payable
Interest income
Investment in Zack
Investment in bonds
Interest expense
00000
Debit
Credit
162,400
31,000
11,460
000
151,246 x
11,195
188,860
16,000
36,732 x
184,187
14,986 x
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