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Able Company issued $900,000 of 9 percent first mortgage bonds on January 1, 20x1, at 103. The bonds mature in 20 years and pay interest

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Able Company issued $900,000 of 9 percent first mortgage bonds on January 1, 20x1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $600,000 of Able's bonds from the original purchaser on December 31, 20X5, for $594,000. Prime owns 60 percent of Able's 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. (lf 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%.) Answer is not complete Debit 600,000 13,500 Event Accounts Credit Bonds payable Premium on bonds payable Interest income 594,000 Investment in Able Company bonds Interest expense Gain on bond retirement Interest payable 27,000 Interest receivable 27,000 b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. (If no entry is required fora 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%.) Answer is not complete Event Accounts Debit Credit Bonds payable Pre 600,000 mium on bonds payable Interest income 594,000 Investment in Able Company bonds Interest expense Investment in Able Company NCI in NA of Able Company Interest payable 27,000 Interest receivable 27,000

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