1. Saguaro Inc. owns 80% of Sequoia Inc. On January 1, 2018, Sequoia sign a note and took a loan from Saguaro for the amount of $1,000,000 with an annual interest rate of 8%. No interest payment has been made. To prepare the consolidated financial statement for 2018 which of the following consolidating entry should be made?

a. debit to note payable in amount of $1,000,000

b. credit to note payable in the amount of $1,000,000

c. debit to note receivable in the amount of $1,000,000

d. credit to note receivable in the amount of $800,000

e. debit to note payable in the amount of $800,000

2. Saguaro Inc. owns 80% of Sequoia Inc. On January 1, 2018, Sequoia sign a note and took a loan from Saguaro for the amount of $1,000,000 with an annual interest rate of 8%. No interest payment has been made. To prepare the consolidated financial statement for 2018 which of the following consolidating entry should be made?

a. debit to interest receivable and credit to interest payable in amount of $80,000

b. debit to interest expense and credit to interest income in amount of $80,000

c. no consolidating entry needed in regard to interest payable and interest receivable

d. debit to interest income and credit to interest expense in amount of $80,000

e. no consolidating entry needed with regard to interest income and expense