Light Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold bonds with a par value of $300,000 at 95. Light purchased two thirds of the bonds; the remainder was sold to nonaffiliates. The bonds mature in ten years and pay an annual interest rate of 6 percent. Interest is paid semiannually on January 1 and July 1.

12. Based on the information given above, what amount of interest expense should be reported in the 20X8 consolidated income statement? A. $6,000 B. $6,500 C. $5,000 D. $10,000

13. Based on the information given above, what amount of interest receivable will be recorded by Light Corporation on December 31, 20X8, in its separate financial statements? A. $5,000 B. $6,500 C. $10,000

D. $6,000

14. Based on the information given above, what amount of interest expense will be eliminated in the preparation of the 20X8 consolidated financial statements? A. $13,000 B. $13,500 C. $10,000 D. $15,000