Payday Company acquired an 80% interest in Sunday Company for $272,000 cash on January 1, 2018. Sunday had the following Balance Sheet on the date of acquisition: Assets ($) Accounts Receivable Depreciable Fixed Assets Land Goodwill Sunday Company Balance Sheet January 1, 2018 Liabilities ($) 90,000 Accounts Payable 200,000 Bonds Payable 50,000 Discount on Bonds Payable 10,000 Common Stock ($10 par) Retained Earnings 350,000 Total Liabilities & Equity 50,000 50,000 (1,620) 100,000 151,620 350,000 Total Assets The excess of the price paid over book value is attributable to the Depreciable Fixed Assets, which have a fair value of $260,000. The Depreciable Assets have a 10-year remaining life. Sunday sold a piece of Land to Payday for $60,000 on January 1, 2019. It cost Sunday $50,000 to purchase the land from an external party. On January 1, 2020, Sunday held merchandise acquired from Payday for $20,000. This beginning inventory had an applicable gross profit of 40%. During 2020, Payday sold $60,000 worth of merchandise to Sunday. Sunday held $30,000 of this merchandise at December 31, 2020. This ending inventory and an applicable gross profit of 35%. Sunday owed Payday $23,000 on December 31, 2020 as a result of these intercompany sales. On January 1, 2020, Payday held merchandise acquired from Sunday for $10,000. This beginning inventory had an applicable gross profit of 25%. During 2020, Sunday sold $40,000 worth of merchandise to Payday. Payday held $6,000 of this merchandise at December 31, 2020. This ending inventory had an applicable gross profit of 30%. Payday owed Sunday $11,000 on December 31, 2020 as a result of these intercompany sales. Sunday sold bonds on January 1, 2017 with a face value of $50,000. These bonds carry a coupon interest rate of 8% and term to maturity of 5 years. The bonds were issued when the market rate was 9%. When Payday purchased these bonds on January 1, 2019, the market rate was 10%. Both companies use the Effective Interest method to amortize the premium/discount on the bonds. Payday and Sunday had the following trial balances on December 31, 2020: Payday 124,000 6,000 400,000 (130,000) 60,000 272,000 49,090 Sunday 85,000 30,000 200,000 (40,000) 10,000 (80,000) Balances Accounts Receivable Inventory Depreciable Fixed Assets Accumulated Depreciation Land Investment in Subsidiary Investment in Subsidiary Bonds Goodwill Accounts Payable Bonds Payable Discount on Bonds Payable Common Stock Retained Earnings, January 1 Sales Expenses Interest Revenue Interest Expense Dividend Income Dividends Declared Total (300,000) (348,264) (200,000) 160,000 (4,826) (50,000) 459 (100,000) (134,880) (100,000) 85,000 4,421 (8,000) 0 0 10,000 0 Required: (1) Using TVM principles: a. Calculate how much Sunday Company received on January 1st 2017 for issuance of the bonds. Round to the nearest dollar. b. Calculate how much Payday Company paid to purchase the bonds on January 13 2019. Round to the nearest dollar. c. Prepare one bond amortization schedule for both the issuer and purchaser. Round each figure to the nearest dollar. (2) Prepare the Eliminating and Adjusting Entries, the Schedules and Worksheet necessary to produce the consolidated financial statements of Payday Company and its subsidiary for the year ended December 31, 2019. Total = 40 marks