Suspect Company Issued $600,000 of 9 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years andpay Interest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the originalpurchaser on December 31, 20X5, for $397,000. 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 Inpreparing consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No journal entryrequired" In the first account field. Do not round your Intermediate calculations. Round your final answers to nearest whole dollar.)Answer is complete but not entirely correct.NoEventA1Bonds payablePremium on bonds payableAccountsInvestment in Suspect Company bondsGain on bond retirementB2Interest payableInterest receivableDebitCredit400,0009,000397,0009,00018,00018,000b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond ownership Inpreparing consolidated financial statements for 20X6. (If no entry is required for a transaction/event, select "No journal entryrequired" In the first account field. Do not round your Intermediate calculations. Round your final answers to nearest whole dollar.)NoEventA1Bonds payablePremium on bonds payableAnswer is not complete.AccountsInterest incomeInvestment in Suspect Company bondsB2Interest payableInterest receivableDebitCredit400,0008,4006,750 x397,20018,00018,000

Corporate Bonds -Corporate bonds are obligations that corporations issue to both public and private…

ompany percent first mortgage bonds ure in terest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the aser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock. red: pare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond owne ring consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No Journ ed" In the first account field. Do not round your Intermediate calculations. Round your final answers to neare Event 1 Bonds payable Answer is complete but not entirely correct. Accounts Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement 2 Interest payable Debit 400,000 Credit 9,000 397,000 9,000 18,000 10.000

ompany percent first mortgage bonds ure in terest semiannually on January 1 and July 1. Prime Corporation purchased $400,000 of Suspect's bonds from the aser on December 31, 20X5, for $397,000. Prime owns 60 percent of Suspect's voting common stock. red: pare the worksheet consolidation entry or entries needed to remove the effects of the Intercorporate bond owne ring consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No Journ ed" In the first account field. Do not round your Intermediate calculations. Round your final answers to neare Event 1 Bonds payable Answer is complete but not entirely correct. Accounts Premium on bonds payable Investment in Suspect Company bonds Gain on bond retirement 2 Interest payable Debit 400,000 Credit 9,000 397,000 9,000 18,000 10.000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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Refer to the information in RE13-5. Assume that on June 30, Aggie received interest on the Smith Corporation bonds. Prepare the June 30 journal entries to record the receipt of the interest. On April 30, 2019, Aggie Corporation purchased Smith Corporation 10%, 5-years bonds with a face value of 12,000 at par plus four months of accrued interest. Prepare the April 30 journal entry to record the purchase of these available-for-sale securities.
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Pretzel Corporation owns 60 percent of Stick Corporation's voting shares. On January 1, 20X2, Pretzel Corporation sold $150,000 par value, 6 percent first mortgage bonds to Stick for $156,000. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. Note: Assume using straight-line amortization of bond discount or premium. Required: a. Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzel's bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 Record the investment in the bonds of Pretzel Corporation. Note: Enter debits before credits. Date January 1, 20X2 General Journal Debit Credit Record entry View general journal Clear entry > b. Prepare the journal entries for 20X2 for Pretzel related to the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account…