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On January 1, 20X1, Prize Corporation paid Morton Advertising $116,200 to acquire 70 percent of Statue Companys stock. Prize also paid $45,000 to acquire $50,000

On January 1, 20X1, Prize Corporation paid Morton Advertising $116,200 to acquire 70 percent of Statue Companys stock. Prize also paid $45,000 to acquire $50,000 par value 8 percent, 10-year bonds directly from Statue on that date. Interest payments are made on January 1 and July 1.

Prepare the 20x1 entries on the books of Prize and Statue for the bonds.

Prepare the 20x1 and the 20x2 consolidation entries for the bonds.

Clarification:

Record the issuance of the bonds and the annual interest expense under the straight line amortization method. Record the acquisition of the bonds and the annual interest income. Finally provide the consolidation entries necessary. I want you to prepare the entries on the books of the parent and the subsidiary for the bonds for x1. Prepare the consolidation entries for x1 and x2 for the bonds ONLY.

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