Porter Company purchased 60 percent ownership of Service Corporation on January 1,201, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Service's book value. On January 1, 20X1, Porter sold $78,000 par value, 8 percent, five-year bonds directly to Service for $80,000 and the market interest rate was 7 percent. The bonds pay interest annually on December 31. Porter uses the fully adjusted equity method in accounting for its ownership of Service. On December 31, 202, the trial balances of the two companies are as follows: Note: Assume using straight-line amortization of bond discount or premium. Required: a. Prepare the journal entry or entries for 202 on Porter's books related to its investment in Servi no entry is required for a transaction/event, select "No journal entry required" in the first accol field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet Record the equity-method income. Note: Enter debits before credits. b. Prepare the journal entry or entries for 202 on Porter's books related to its bonds payable. (If n entry is required for a transaction/event, select "No journal entry required" in the first account fi Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Journal entry worksheet Record the entry for interest expense on bond investment. Note: Enter debits before credits. c. Prepare the journal entry or entries for 202 on Service's books related to its investment in Port bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the fi account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Journal entry worksheet Record the entry for the interest income on the bond investment. Note: Enter debits before credits. d. Prepare the consolidation entries needed to complete a consolidated worksheet for 202. entry is required for a transaction/event, select "No journal entry required" in the first accol Do not round your intermediate calculations. Round your final answers to nearest whole do Consolidation Worksheet Entries Note: Enter debits before credits. d. Prepare the consolidation entries needed to complete a consolidated worksheet for 202. (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.) Consolidation Worksheet Entries Record the entry to eliminate the intercompany bond holdings. Note: Enter debits before credits. e. Prepare a three-part consolidated worksheet for 202. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PORTER COMPANY AND SUBSIDIARY Consolidated Financial Statement Workaheet December 31, 20x2 Porter Company purchased 60 percent ownership of Service Corporation on January 1,201, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Service's book value. On January 1, 20X1, Porter sold $78,000 par value, 8 percent, five-year bonds directly to Service for $80,000 and the market interest rate was 7 percent. The bonds pay interest annually on December 31. Porter uses the fully adjusted equity method in accounting for its ownership of Service. On December 31, 202, the trial balances of the two companies are as follows: Note: Assume using straight-line amortization of bond discount or premium. Required: a. Prepare the journal entry or entries for 202 on Porter's books related to its investment in Servi no entry is required for a transaction/event, select "No journal entry required" in the first accol field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet Record the equity-method income. Note: Enter debits before credits. b. Prepare the journal entry or entries for 202 on Porter's books related to its bonds payable. (If n entry is required for a transaction/event, select "No journal entry required" in the first account fi Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Journal entry worksheet Record the entry for interest expense on bond investment. Note: Enter debits before credits. c. Prepare the journal entry or entries for 202 on Service's books related to its investment in Port bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the fi account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Journal entry worksheet Record the entry for the interest income on the bond investment. Note: Enter debits before credits. d. Prepare the consolidation entries needed to complete a consolidated worksheet for 202. entry is required for a transaction/event, select "No journal entry required" in the first accol Do not round your intermediate calculations. Round your final answers to nearest whole do Consolidation Worksheet Entries Note: Enter debits before credits. d. Prepare the consolidation entries needed to complete a consolidated worksheet for 202. (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.) Consolidation Worksheet Entries Record the entry to eliminate the intercompany bond holdings. Note: Enter debits before credits. e. Prepare a three-part consolidated worksheet for 202. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PORTER COMPANY AND SUBSIDIARY Consolidated Financial Statement Workaheet December 31, 20x2
