On January 1, 2009, Hedwig Corporation issued $500,000 par value, 10-year, 15% bonds. Interest is payable each June 30 and December 31. On January 1, 2012, Senter Corporation, a

90%-owned subsidiary, purchased on the open market all of the parent company bonds. Both companies have a December 31 year-end. For this problem, assume the following four independent cases.

	Issue Price by Hedwig Corporation on January 1, 2009	Purchase Hedwig by Senter Corporation on January 1, 2012
Case 1	$512,000	$514,000
Case 2	488,000	486,000

Required:

a. For cases 1 and 2, compute the total constructive gain or loss and the portion allocated to each company.

b. For cases 1 and 2 prepare the journal entry or entries to be made by Hedwig Corporation and Senter Corporation on June 30, 2012. Both companies amortize discounts and premiums each interest payment date and use the straight-line method of amortization. Assume that Hedwig uses the partial equity method to account for its investment in Senter

c. For cases 1 and 2, prepare in general journal form the intercompany bond elimination entries required in the December 31, 2012, consolidated statements workpaper.