P8-18A Prior Retirement of Bonds (Straight-Line Method) LO 8-4 Plug Corporation purchased $116,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from Lemon Corporation. The 10-year bonds bear a 9 percent coupon rate, and Spark originally sold them on January 1, 20X3, to Lemon. Interest is pald annually on December 31. Plug owns 85 percent of the stock of Spark. In preparing the consolidation worksheet at December 31, 20X6, Plug's controller made the following entry to eliminate the effects of the Intercorporate bond ownership: Credit Consolidation Worksheet Entries Bonds Payable Interest Income Investment in Spark Company Stock NCI in NA of Spark Company Investment in Spark Company Bonds Discount on Bonds Payable Interest Expense Debit 116,eee 10,040 5,355 945 118,400 3,eee 10,940 Required: With the Information given, answer the following questions: a. What amount did Plug pay when it purchased Spark's bonds? Purchase price b. Prepare the Journal entry made by Spark In 20X6 to record Its Interest expense for the year. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) View transaction list Journal entry worksheet Record the annual payment of the interest. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal c. Prepare the journal entry made by Plug In 20x6 to record Its Interest Income on the Spark bonds that it holds. (If no entry Is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list Journal entry worksheet