Separate financial statements for the year ended December 31, 20X4 for P Company and its 90% owned subsidiary S Company are presented below:

	P Co.	S Co.
	12/31/X4	12/31X4
Income Statement
Sales	$1,550,000.00	$400,000.00
Equity in S Co. income (loss)	12,647.50
Gain on sale of equipment		2,500.00
Gain on sale of land		300.00
Loss on sale of equipment	(250.00)
Loss on sale of land		(1,500.00)
Cost of goods sold	(900,000.00)	(200,000.00)
Operating expenses	(600,000.00)	(175,000.00)
Depreciation expense	(20,000.00)	(10,000.00)
Net income	$42,397.50	$16,300.00
Statement of Retained Earnings
Retained earnings, 1/1/X4	$517,615.00	55,725.00
Net income	42,397.50	16,300.00
Dividends	(150,000.00)	(35,000.00)
Retained earnings, 12/31/X4	$410,012.50	$37,025.00
Balance Sheet
Cash	247,000.00	24,475.00
Accounts receivable	125,000.00	25,000.00
Inventory	110,000.00	35,000.00
Investment in S Company	105,812.50
Land	211,750.00	21,550.00
Building and equipment	445,250.00	120,000.00
Accumulated deprciation	(47,300.00)	(24,000.00)
Total assets	$1,197,512.50	$202,025.00
Accounts payable	150,000.00	38,155.00
Bonds payable	500,000.00	75,000.00
Discount on bonds payable	(12,500.00)
Premium on bonds payable		1,845.00
Common stock	100,000.00	40,000.00
Addl. paid-in capital:	50,000.00	10,000.00
Retained earnings	410,012.50	37,025.00
Total liabilites and equity	$1,197,512.50	$202,025.00

Separate financial statements for the year ended December 31, 20X5 for P Company and its 90% owned subsidiary S Company are presented below:

	P Company	S Company
	12/31/X5	12/31/X5
Income Statement
Sales	$1,650,000	$500,000
Interest income - notes	150	250
Interest income - bonds	3,203	17,250
Equity in S Co. NI (NL)	153,401
Cost of goods sold	(900,000)	(175,000)
Operating expenses	(600,000)	(150,000)
Depreciation expense	(20,000)	(10,000)
Interest expense	(38,750)	(5,843)
Net income	$248,004	$176,657
Statement of Retained Earnings
Retained earnings, 1/1/X5:	$410,013	$37,025
Net income	248,004	176,657
Dividends	(125,000)	(25,000)
Retained earnings, 12/31/X5	$533,017	$188,682
Balance Sheet
Cash	$238,466	$(240,180)
Accounts receivable	125,000	10,000
Inventory	110,000	25,000
Notes receivable	5,000	2,500
Interest receivable - notes	150	250
Interest receivable - bonds	1,500	16,875
Investment in S Company	236,713
Investment in bonds	36,488	441,375
Land	211,750	21,550
Equipment	445,250	120,000
Accumulated depreciation	(67,300)	(34,000)
Total assets	$1,343,017	$363,370
Accounts payable	$150,000	$40,000
Notes payable	2,500	5,000
Interest payable - notes	250	150
Interest payable - bonds	18,750	3000
Bonds payable	500,000	75,000
Discount on bonds payable	(11,500)
Premium on bonds payable		1,538
Common stock	100,000	40,000
Addl. Paid-in capital	50,000	10,000
Retained earnings	533,017	188,682
Total liabilities and equity	$1,343,017	$363,370

Additional Information

1.

During 20X5, P Company sold merchandise costing $30,000 to S Company for $45,000.

2.

During 20X5, S Company sold merchandise costing $10,000 to P Company for $15,000.

3.

Before the end of 20X5, S Company sold 40% of the merchandise it purchased from P Company during 20X5.

4.

Before the end of 20X5, P Company sold 80% of the merchandise it purchased from S Company during 20X5.

5.

On January 1, 20X5, S Company gave $2,500 cash to P Company in exchange for a three-year note signed by P. The note bears interest at 10% payable each January 1.

6.

On July 1, 20X5, P Company transferred $5,000 cash to S Company. In exchange, S Company signed a 6% one-year note. Interest is payable when the note is due.

7.

On January 1, 20X5, P Company purchased in the open market $37,500 of the $75,000 par value, 8%, ten-year bonds of S Company for $36,285.00. The bonds were sold on January 1, 20X1, with interest payments on January 1 and July 1 each year.

8.

On June 30, 20X5, S Company purchased in the open market $450,000 par value, 7 1/2%, 20-year bonds of P Company for $457,875.00, including $16,875.00 accrued interest. These bonds were part of an original $500,000 par value issue that was sold 8 years ago. Interest is paid on January 1 and July 1 each year

9.

There is no indication that goodwill has been impaired during 20X5.

Complete the amortization schedule below for S Companys bonds payable for P Company's share using the straight-line method. (Round your answers to 2 decimal points.)

S Company Bonds Payable Amortization Schedule for P Company Share
			Unamortized	8%
	Face	Unamortized	Carrying	Cash	Premium	Interest
Date	Value	Premium	Value	Interest	Amortized	Expense
1/1/X5	$37,500
12/31/X5	37,500
12/31/X6	37,500

Complete the amortization schedule below for P Companys investment in the bonds of S Company. using the straight-line method. (Round your answers to 2 decimal points.)

P Company Investment in S Company Bonds Amortization Schedule
		Unamortized	8%
	Face	Carrying	Cash	Discount	Interest
Date	Value	Value	Interest	Amortized	Income
1/1/X5	$37,500
12/31/X5	37,500
12/31/X6	37,500

c.	Complete the amortization schedule below for P Companys bonds payable for S Company's share using the straight-line method. (Round your answers to 2 decimal points.)

P Company Bonds Payable Amortization Schedule for S Company Share
			Unamortized	7.5%
	Face	Unamortized	Carrying	Cash	Discount	Interest
Date	Value	Discount	Value	Interest	Amortized	Expense
6/30/X5	$450,000
12/31/X5	450,000
12/31/X6	450,000

d.	Complete the amortization schedule below for S Companys investment in the bonds of P Company. using the straight-line method. (Round your answers to 2 decimal points.)

S Company Investment in P Company Bonds Amortization Schedule
		Unamortized	7.5%
	Face	Carrying	Cash	Discount	Interest
Date	Value	Value	Interest	Amortized	Income
6/30X5	$450,000
12/31/X5	450,000
12/31/X6	450,000