P8-15A Consolidation Worksheet with Sale of Bonds to Parent (Straight-Line Method) LO 8-2

Punk Corporation purchased 90 percent of Soul Companys voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $95,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $99,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows:

	Punk Corporation												Soul Company
Item	Debit						Credit						Debit						Credit
Cash & Receivables		$	40,000											$	54,600
Inventory			176,000												81,000
Buildings & Equipment			405,000												260,000
Investment in Soul Company Stock			106,470
Investment in Soul Company Bonds			96,600
Cost of Goods Sold			74,000												67,800
Depreciation Expense			18,000												13,000
Interest Expense			15,700												4,900
Dividends Declared			28,000												18,000
Accumulated Depreciation								$	132,000											$	72,000
Current Payables									106,000												108,700
Bonds Payable									195,000												95,000
Bond Premium																					1,600
Common Stock									101,000												61,000
Retained Earnings									236,000												31,000
Sales									145,000												130,000
Interest Income									4,900
Income from Soul Company Stock									39,870
Total		$	959,770					$	959,770					$	499,300					$	499,300

Required: a. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company stock. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No Event General Journal Debit Credit A 1 Cash 16,200 Investment in Soul Company stock 16,200 B 2 Investment in Soul Company stock Income from Soul Company stock b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No Event General Journal Debit Credit A 1 Cash Interest income Investment in Soul Company bonds OOO c. Prepare the journal entry or entries for 20X4 on Soul's books related to its bonds payable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) X Answer is not complete. No Event General Journal Debit Credit A 1 Interest expense Bond premium Cash d. Prepare the consolidation entries needed to complete a consolidated worksheet for 20X4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) X Answer is not complete. No Event Accounts Debit Credit A 1 Common stock Retained earnings Income from Soul Company stock Bonds payable Investment in Soul Company stock Interest receivable B 2 Bonds payable Bond premium Investment in Soul Company bonds