Suspect Company Issued $1,170,000 of 8 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $780,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $774,000. Prime owns 70 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X5. b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X6 B 00 Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar. A No Event 1 Accounts Bonds payable Premium on bonds payable Interest income Investment in Suspect Company bonds 2 Interest payable Interest receivable < Required A Required B > Show less Debit Credit 780,000 31,200 31,200
Suspect Company Issued $1,170,000 of 8 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $780,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $774,000. Prime owns 70 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X5. b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In preparing consolidated financial statements for 20X6 B 00 Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar. A No Event 1 Accounts Bonds payable Premium on bonds payable Interest income Investment in Suspect Company bonds 2 Interest payable Interest receivable < Required A Required B > Show less Debit Credit 780,000 31,200 31,200
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 7MCQ
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Question
Transcribed Image Text:Suspect Company Issued $1,170,000 of 8 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and
pay Interest semiannually on January 1 and July 1. Prime Corporation purchased $780,000 of Suspect's bonds from the original
purchaser on December 31, 20X5, for $774,000. Prime owns 70 percent of Suspect's voting common stock.
Required:
a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In
preparing consolidated financial statements for 20X5.
b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership In
preparing consolidated financial statements for 20X6
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in
preparing consolidated financial statements for 20X6.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
your intermediate calculations. Round your final answers to nearest whole dollar.
A
No
Event
1
Accounts
Bonds payable
Premium on bonds payable
Interest income
Investment in Suspect Company bonds
B
2
Interest payable
Interest receivable
< Required A
Required B >
Show less
Debit
Credit
780,000
31,200
31,200
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