Nettle Corporation sold \(\$ 100,000\) par value, 10 -year, first mortgage bonds to Timberline Corporation on January 1, 20X5. The bonds, which bear a nominal interest rate of 12 percent, pay interest semiannually on January 1 and July 1. The entry to record interest income by Timberline Corporation on December 31, 20X7, was as follows:

Timberline Corporation owns 65 percent of the voting stock of Nettle Corporation, and consolidated statements are prepared on December 31, 20X7.
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a. What was the original purchase price of the bonds to Timberline Corporation?

b. What is the balance in Timberline's bond investment account on December 31, 20X7?

c. Give the workpaper eliminating entry or entries needed to remove the effects of the intercompany ownership of bonds in preparing consolidated financial statements for 20X7.

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Interest Receivable 6,000 Interest Income 5,750 Investment in Nettle Corporation Bonds 250