Farley Corporation owns 70 percent of Snowball Enterprises stock. On January 1, 20X1, Farley sold $1.03 million par value, 10 percent (paid semiannually), 20-year, first mortgage bonds to Kling Corporation at 97. On January 1, 20X8, Snowball purchased $309,000 par value of the Farley bonds directly from Kling for $305,880.

Required:

Prepare the consolidation entry needed at December 31, 20X8, to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements.