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A. Record the Dividend from Service? B. Record the Equity Method Income? P8-14A Consolidation Worksheet with Sale of Bonds to Subsidiary (Straight-Line Method) LO 8-2

image text in transcribedA. Record the Dividend from Service?

B. Record the Equity Method Income?

image text in transcribed

P8-14A Consolidation Worksheet with Sale of Bonds to Subsidiary (Straight-Line Method) LO 8-2 Porter Company purchased 60 percent ownership of Service Corporation on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Service's book value. On January 1, 20X1, Porter sold $75,000 par value, 8 percent, five-year bonds directly to Service for $77,000 and the market interest rate was 7 percent. The bonds pay interest annually on December 31. Porter uses the fully adjusted equity method in accounting for its ownership of Service. On December 31, 20X2, the trial balances of the two companies are as follows: Note: Assume using straight-line amortization of bond discount or premium. Porter Company Debit Credit $ 89, 200 137,000 505,000 103,800 Service Corporation Debit Credit $ 40,000 65,000 300,000 96,800 20,000 5,600 36,000 76,200 54,000 10,000 13,600 7,000 Item Cash & Accounts Receivable Inventory Buildings & Equipment Investment in Service Corporation Stock Investment in Porter Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Interest Income Income from Service Corp. Total $ 57,000 60,200 191,000 $157,000 115,600 75,000 1,200 187,000 217,000 207,000 87,000 37,000 128,000 5,600 33,600 $993,400 $993, 400 $565,800 $565,800 Required: a. Prepare the journal entry or entries for 20x2 on Porter's books related to its investment in Service. (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.) b. Prepare the journal entry or entries for 20x2 on Porter's books related to its bonds payable. (If no required for a transaction/event, select "No journal entry required" in the first account field. Do no your intermediate calculations. Round your final answers to nearest whole dollar.) View transaction list Journal entry worksheet A Record the entry for interest expense on bond investment. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal

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