Punk Corporation purchased 90 percent of Soul Company’s voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $100,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $104,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows:

Required

a. Record the journal entry or entries for 20X4 on Punk’s books related to its investment in Soul Common stock.

b. Record the journal entry or entries for 20X4 on Punk’s books related to its investment in Soul Company bonds.

c. Record the journal entry or entries for 20X4 on Soul’s books related to its bonds payable.

d. Prepare the consolidation entries needed to complete a consolidated worksheet for 20X4.

e. Prepare a three-part consolidated worksheet for 20X4.

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Item Cash & Receivables Inventory Buildings & Equipment Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings Sales Interest Income Income from Soul Company Punk Corporation Debit $ 22,000 165,000 400,000 121,392 101,720 86,000 20,000 16,000 30,000 Credit $140,000 92,400 200,000 120,000 242,012 140,000 5,202 22,498 $962,112 $962,112 Soul Company Debit $36,600 75,000 240,000 79,800 15,000 5,202 20,000 $471,602 Credit $ 80,000 35,000 100,000 1,720 80,000 49,882 125,000 $471,602