Stang Corporation issued to Bradley Company $400,000 par value, 10-year bonds with a coupon rate of 12 percent on January 1, 20X5, at 105. The bonds pay interest semiannually on July 1 and January 1. On January 1, 20X8, Purple Corporation purchased $100,000 of the bonds from Bradley for $104,900. Purple owns 65 percent of the voting common shares of Stang and prepares consolidated financial statements.

a. Prepare the worksheet elimination entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X8.

b.

Assuming that Stang reports net income of $20,000 for 20X8, compute the amount of income assigned to noncontrolling shareholders in the 20X8 consolidated income statement c. Prepare the worksheet elimination entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X9.