Question
Suspect Company issued $1,200,000 of 9 percent first mortgage bonds on January 1, 20X1, at 102. The bonds mature in 20 years and pay interest
Suspect Company issued $1,200,000 of 9 percent first mortgage bonds on January 1, 20X1, at 102. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $800,000 of Suspect's bonds from the original purchaser on January 1, 20X5, for $795,200. Prime owns 60 percent of Suspect's voting common stock. Required: a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Answer is not complete. No Event A 1 Bonds payable Premium on bonds payable Interest income Gain on bond retirement Interest expense Accounts Investment in Suspect Company bonds B 2 Interest payable Interest receivable Debit Credit 800,000 120,000 22,800 795,200 36,000 36,000 b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.) Answer is not complete. No Event Accounts Debit Credit
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