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Problem 3 On January 1, 2019, Parent Company purchased 90% of the common stock of Subsidiary Company for $360,000. On January 1, 2019, Subsidiary sold

Problem 3

On January 1, 2019, Parent Company purchased 90% of the common stock of Subsidiary Company for $360,000. On January 1, 2019, Subsidiary sold $200,000 par value of 8%, ten-year bonds for $194,000. The bonds pay interest semi-annually on January 1 and July 1 of each year.

On January 1, 2021, Parent repurchased all of Subsidiary's bonds for $192,000. The bonds are still held on December 31, 2021.

Both companies have correctly recorded all entries relative to bonds and interest, using straight-line amortization for premium or discount.

Required:

Prepare the eliminating entries pertaining to the intercompany purchase of bonds for the year ended December 31, 2021.

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