Question
Able Company issued $810,000 of 9 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and pay interest
Able Company issued $810,000 of 9 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 $540,000 of Ables bonds from the original purchaser on December 31, 20X5, for $537,000. Prime owns 70 percent of Ables 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your market rate of interest to 3 decimals. For example, .0547523 should be rounded to 5.475%.) a1. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X5 a2.Record the entry to eliminate the intercompany interest receivable/payables for 20x5
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started