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Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 9 percent ($86,400) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $820,000. 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 complete but not entirely correct. Accounts Date December 31, 201 Bonds payable Interest income Investment in bonds Interest expense Gain on retirement of debt December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense x 33333 Debit 170,000 9,870 138,010 193,963 9,735 21,000 Credit 98,400 21,000 138,010 98 400

Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 9 percent ($86,400) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $820,000. 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 complete but not entirely correct. Accounts Date December 31, 201 Bonds payable Interest income Investment in bonds Interest expense Gain on retirement of debt December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense x 33333 Debit 170,000 9,870 138,010 193,963 9,735 21,000 Credit 98,400 21,000 138,010 98 400

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 9 percent ($86,400) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $820,000. 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 complete but not entirely correct. Accounts Date December 31, 201 Bonds payable Interest income Investment in bonds Interest expense Gain on retirement of debt December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense ***** Debit 170,000 9.870 138,010 193,963 9,735 21,000 Credit 98,400 21,000 138,010 98,400
Transcribed Image Text:Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 9 percent ($86,400) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 7 percent. The bond liability had a carrying amount on that date of $820,000. 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 complete but not entirely correct. Accounts Date December 31, 201 Bonds payable Interest income Investment in bonds Interest expense Gain on retirement of debt December 31, 202 Bonds payable Interest income Investment in Zack Investment in bonds Interest expense ***** Debit 170,000 9.870 138,010 193,963 9,735 21,000 Credit 98,400 21,000 138,010 98,400
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