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Please show step by step for answers in red in sections a. Please show section b. letters A and B E8-7 Constructive Retirement at End
Please show step by step for answers in red in sections a.
Please show section b. letters A and B
E8-7 Constructive Retirement at End of Year (Effective Interest Method) LO 8-2 Suspect Company issued $1,170,000 of 8 percent first mortgage bonds on January 1, 20x1, at 104. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $780,000 of Suspect's bonds from the original purchaser on December 31, 20X5, for $774.000. Prime owns 70 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5. (lf no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Answer is complete but not entirely correct. No Event Credit A 1 Accounts Bonds payable Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement Debit 780,000 31,200 774,000 31,200 00 2 31,200 Interest payable Interest receivable 31,200 b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Answer is not complete. Accounts No Event Debit Credit b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) view transaction list Consolidation Worksheet Entries Record the entry to eliminate the effects of the intercompany ownership in bonds for 20x6. Note: Enter debits before credits. Event Accounts Debit Credit b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) view transaction list Consolidation Worksheet EntriesStep by Step Solution
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