Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parents interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.

On January 1, 2011, Hamilton sold $1,700,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 10 percent payable every December 31. Cairns acquired 35 percent of these bonds at 96 percent of face value on January 1, 2013. Both companies utilize the straight-line method of amortization.

Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Date	Consolidating Entries	Debit	Credit
(1) Prepare entry B
December 31, 2013	Bonds payable	595,000
	Interest income
	Premium on bonds payable
	Gain on retirement of bonds
	Investment in bonds
	Interest expense
(2) Prepare entry *B
December 31, 2014	Bonds payable
	Interest income
	Premium on bonds payable
	Investment in Hamilton
	Investment in bonds
	Interest expense
(3) Prepare entry *B
December 31, 2015	Bonds payable
	Interest income
	Premium on bonds payable
	Investment in Hamilton
	Investment in bonds
	Interest expense