Pretzel Corporation owns 60 percent of Stick Corporations voting shares On January 1, 20X2, Pretzel Corporation sold $205,000 par value, 10 percent first mortgage bonds to Stick for $210,000 The bonds mature in 10 years and pay interest semiannually on January 1 and July 1 Required Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzels bonds (Record the investment in the bonds of Pretzel Corporation, the semiannual interest income received from the bonds of Pretzel Corporation, and the semiannual interest receivable from the bonds of Pretzel Corporation) Prepare the journal entries for 20X2 for Pretzel related to the bonds ( Record the investment in Pretzel Corporation bonds by Stick Corporation, the payment of interest and the amortization of the bond premium , and the interest payable and the amortization of bond premium ) Prepare the worksheet consolidation entries needed on December 31, 20X2, to remove the effects of the intercorporate ownership of bonds (Record the entry to eliminate the intercompany bond holdings, and the entry to eliminate intercompany receivable or payable )

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Posted on Aug 08, 2024

Pretzel Corporation owns 60 percent of Stick Corporations voting shares. On January 1, 20X2, Pretzel Corporation sold $205,000 par value, 10 percent first mortgage bonds

Pretzel Corporation owns 60 percent of Stick Corporations voting shares. On January 1, 20X2, Pretzel Corporation sold $205,000 par value, 10 percent first mortgage bonds to Stick for $210,000. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1.

Required:

Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzels bonds. (Record the investment in the bonds of Pretzel Corporation, the semiannual interest income received from the bonds of Pretzel Corporation, and the semiannual interest receivable from the bonds of Pretzel Corporation)
Prepare the journal entries for 20X2 for Pretzel related to the bonds. (Record the investment in Pretzel Corporation bonds by Stick Corporation, the payment of interest and the amortization of the bond premium., and the interest payable and the amortization of bond premium.)
Prepare the worksheet consolidation entries needed on December 31, 20X2, to remove the effects of the intercorporate ownership of bonds. (Record the entry to eliminate the intercompany bond holdings, and the entry to eliminate intercompany receivable or payable.)