SOLVE FOR THE YELLOW BLANKS. EXPLAIN YOUR WORK.

Problem 2. Upstream intercompany bond transactions Parent Company acquired 90% of Subsidiary in the past. On January 1, 20x2, Parent acquired some of Subsidiary's bonds from bondholders. The bond amortization tables for both Parent and Subsidiary are shown below. The accountant for the company received his PhD in accounting from the University of Kansas, and was therefore incompetent in most of the technical aspects of accounting. He managed to complete the consolidation process successfully except for considering the intercompany bond transaction. As you might have already guessed, he also couldn't produce a statement of cash flows, but instead simply started laughing when someone suggest he try it. I just know you're anxious to help the ole guy out with all of this. Thanks ever Payment Change Payment Interest 5.10% Change Investment 556 Interest 4.70% 32,756 32,783 32,810 32,839 32,869 583 32,200 32,200 32,200 32,200 32,200 Bond Payable 696,944 697,500 698,083 698,693 699,331 700,000 861 610 904 9,660 9,660 9,660 9,660 10,521 10,564 10,611 10,659 206,285 207,146 208,050 209,001 210,000 639 669 951 999 Parent and Subsidiary Consolidated Income Statement for the year ended December 31 Sales Cost of goods sold Salary expense Operating expenses Depreciation expense Operating income before MI Minority Interest income/expense Interest expense Interest income Gain on retirement of debt The upstream intercompany transaction took place on January 1, 20x2. The balances 20X2 $ 1,955,000 938,000 469,000 332,000 91,650 124,350 13,000 32,783 10,521 Corrected $ 1,955,000.00 938,000 469,000 332,000 91,650 124,350 Net income Earnings per share $ $ 89,088 0.50 Parent and Subsidiary Consolidated Statement of Retained Earnings for the year ended December 31 Beginning retained earnings Net income Dividends Ending retained earnings Corrected 107,644 20X2 $ 107,644 $ 89,088 (19,000) $ 177,732 (19,000) Parent and Subsidiary Consolidated Balance Sheet as of December 31 Cash Accounts receivable Inventory Investment in bonds Equipment Accumulated depreciation Goodwill Corrected 20X2 112,400 193,700 76,200 20X1 20X2 $ 106,000 $ 112,400 $ 174,500 193,700 83,700 76,200 207,146 1,925,000 2,037,000 (433,000) (524,650) 99,000 99,000 2,037,000 (524,650) 99,000 Total $1,955,200 $ 2,200,796 180,781 38,500 4,000 Accounts payable Salaries payable Dividends payable Bonds payable Common stock ($1 par value) Additional paid-in capital Retained earnings Minority interest equity Total $ 307,256 $ 180,781 $ 41,900 38,500 2,900 4,000 697,500 698,083 126,000 178,900 571,000 810,800 107,644 177,732 101,000 112,000 $1,955,200 $ 2,200,796 178,900 810,800 Problem 2. Upstream intercompany bond transactions Parent Company acquired 90% of Subsidiary in the past. On January 1, 20x2, Parent acquired some of Subsidiary's bonds from bondholders. The bond amortization tables for both Parent and Subsidiary are shown below. The accountant for the company received his PhD in accounting from the University of Kansas, and was therefore incompetent in most of the technical aspects of accounting. He managed to complete the consolidation process successfully except for considering the intercompany bond transaction. As you might have already guessed, he also couldn't produce a statement of cash flows, but instead simply started laughing when someone suggest he try it. I just know you're anxious to help the ole guy out with all of this. Thanks ever Payment Change Payment Interest 5.10% Change Investment 556 Interest 4.70% 32,756 32,783 32,810 32,839 32,869 583 32,200 32,200 32,200 32,200 32,200 Bond Payable 696,944 697,500 698,083 698,693 699,331 700,000 861 610 904 9,660 9,660 9,660 9,660 10,521 10,564 10,611 10,659 206,285 207,146 208,050 209,001 210,000 639 669 951 999 Parent and Subsidiary Consolidated Income Statement for the year ended December 31 Sales Cost of goods sold Salary expense Operating expenses Depreciation expense Operating income before MI Minority Interest income/expense Interest expense Interest income Gain on retirement of debt The upstream intercompany transaction took place on January 1, 20x2. The balances 20X2 $ 1,955,000 938,000 469,000 332,000 91,650 124,350 13,000 32,783 10,521 Corrected $ 1,955,000.00 938,000 469,000 332,000 91,650 124,350 Net income Earnings per share $ $ 89,088 0.50 Parent and Subsidiary Consolidated Statement of Retained Earnings for the year ended December 31 Beginning retained earnings Net income Dividends Ending retained earnings Corrected 107,644 20X2 $ 107,644 $ 89,088 (19,000) $ 177,732 (19,000) Parent and Subsidiary Consolidated Balance Sheet as of December 31 Cash Accounts receivable Inventory Investment in bonds Equipment Accumulated depreciation Goodwill Corrected 20X2 112,400 193,700 76,200 20X1 20X2 $ 106,000 $ 112,400 $ 174,500 193,700 83,700 76,200 207,146 1,925,000 2,037,000 (433,000) (524,650) 99,000 99,000 2,037,000 (524,650) 99,000 Total $1,955,200 $ 2,200,796 180,781 38,500 4,000 Accounts payable Salaries payable Dividends payable Bonds payable Common stock ($1 par value) Additional paid-in capital Retained earnings Minority interest equity Total $ 307,256 $ 180,781 $ 41,900 38,500 2,900 4,000 697,500 698,083 126,000 178,900 571,000 810,800 107,644 177,732 101,000 112,000 $1,955,200 $ 2,200,796 178,900 810,800