Question
E8-8A Constructive Retirement at Beginning of Year (Straight-Line Method) LO 8-2 Suspect Company issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1,
E8-8A Constructive Retirement at Beginning of Year (Straight-Line Method) LO 8-2
Suspect Company issued $600,000 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 $400,000 of Suspects bonds from the original purchaser on January 1, 20X5, for $396,800. Prime owns 60 percent of Suspects voting common stock. Note: Assume using straight-line amortization of bond discount or premium. 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.
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.
Consolidation Worksheet Entries Record the entry to eliminate the effects of the intercompany ownership in Suspect bonds for 20X5. Note: Enter debits before credits. Event Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries AB Record the entry to eliminate the effects of the intercompany ownership in Suspect bonds for 20X6. Note: Enter debits before credits Event Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Record the entry to eliminate the intercompany interest receivables/payables for 20X6. Note: Enter debits before credits. Event Accounts Debit Credit 2 Record entry Clear entry view consolidation entries
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