Question

Complete the following partial worksheet for Pat Inc. and subsidiary Slinger Company for the first year subsequent to acquisition intercompany bonds, 20X4 Pat Inc. and Subsidiary Slinger Company Partial Consolidated Worksheet For the Year Ended December 31, 20X4 Trial Balance Eliminations and Adjustments Pat Slinger Dr. Cr. Interest receivable 8,000 Investments in Slinger bonds 99,000 Interest payable (8,000) Bonds payable (100,000) Premium on bonds payable (200) Interest income (9,000) Interest expense 7,800 Elimination and Adjustments:

(B1) Eliminate the intercompany bonds and the applicable interest revenue and expense. Record the adjustment to retained earnings

(B2) Eliminate the intercompany interest payable and receivable.

Answer 1

Interest receivable	$              8,000
Investments in Slinger bonds	$            99,000
Interest payable	$            (8,000)
Bonds payable	$       (100,000)
Premium on bonds payable	$                (200)
Interest income	$            (9,000)
Interest expense	$              7,800
Retained earnings	$            (2,400)
Adjustment to retained earnings	$              2,400

Elimination entries
Date	General journal	Debit	Credit
December 31, 20X4	Bond payable	100,000
	Premium on bond payable	200
	Interest income	9,000
	Investments in Slinger bonds		99,000
	Interest expense		7,800
	Retained earnings		2,400
	(To record elimination the intercompany bonds and the applicable interest revenue and expense. Record the adjustment to retained earnings)
December 31, 20X4	Interest payable	8,000
	Interest receivable		8,000
	(To record eliminate the intercompany interest payable and receivable)