Pepper Enterprises owns 95 percent of Salt Corporation. On January 1, 20X1, Salt issued $230,000 of five-year bonds at 115. Annual interest of 12 percent is paid semiannually on January 1 and July 1. Pepper purchased $130,000 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.

	Pepper Enterprises			Salt Corporation
Investment in Salt Corporation Bonds	$	135,700
Interest Income		5,650
Interest Receivable		7,800
Bonds Payable				$	230,000
Bond Premium					18,300
Interest Expense					20,700
Interest Payable					15,600

Prepare the consolidation worksheet consolidation entry or entries as of December 31, 20X3, to remove the effects of the intercorporate bond ownership.

Consolidation Worksheet Entries

• Record the entry to eliminate the intercompany interest receivables/payables for 20X3.

Event	Accounts	Debit	Credit
2	Interest payable
	Interest receivable