Exercise $8-1($Algo$)$ Bond Sale from Parent to Subsidiary $($Effective Interest Method$)$ LO $8-2$

Pretzel Corporation owns $60$ percent of Stick Corporation$$s voting shares. On January $1,20$X$2,$ Pretzel Corporation sold $$215,000$ par value, $8$ percent first mortgage bonds to Stick for $$222,000.$ The bonds mature in $10$ years and pay interest semiannually on January $1$ and July $1.$

Required:

Prepare the journal entries for $20$X$2$ for Stick related to its ownership of Pretzel$$s bonds.

Prepare the journal entries for $20$X$2$ for Pretzel related to the bonds.

Prepare the worksheet consolidation entries needed on December $31,20$X$2,$ to remove the effects of the intercorporate ownership of bonds.