Online Enterprises owns 95 percent of Downlink Corporation. On January 1, 20X1, Downlink issued $210,000 of five-year bonds at 115. Annual interest of 12 percent is paid semiannually on January 1 and July 1. Online purchased $110,000 of the bonds on August 31, 20X3, at par value. The following balances are taken from the separate 20X3 financial statements of the two companies:

Note: Assume using straight-line amortization of bond discount or premium.

	Online Enterprises			Downlink Corporation
Investment in Downlink Corporation Bonds	$	115,700
Interest Income		4,550
Interest Receivable		6,600
Bonds Payable				$	210,000
Bond Premium					14,100
Interest Expense					18,900
Interest Payable					13,200

Required:

a.

Compute the amount of interest expense that should be reported in the consolidated income statement for 20X3. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

b.

Compute the gain or loss on constructive bond retirement that should be reported in the 20X3 consolidated income statement. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

c. Prepare the consolidation worksheet consolidation entry or entries as of December 31, 20X3, to remove the effects of the intercorporate bond ownership. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
-Record the entry to eliminate the effects of the intercompany ownership in bonds for 20X3. -Record the entry to eliminate the intercompany interest receivables/payables for 20X3.