Question

In: Accounting

On January 1 2000 The Patriot Company purchased all of the stock of the Chief Company...

On January 1 2000 The Patriot Company purchased all of the stock of the Chief Company at book value
Patriot accounts for its investment in Chief using the initial value method and Chief does not pay dividends
On January 1, 2014 Patriot Company issued (sold) $500,000 8% semi-annual bonds for $530,000
These 20 year bonds pay interest on July 1 and January 1 of each year. Patriot uses straight-line amortization
On January 1, 2019 Chief Company purchased the Patriot bonds for $485000. Chief also uses straight-line
amortization
REQUIRED:
a) make Patriot's journal entry when they sell the bonds
b) make the entry Patriot makes when it makes its first interest payment on July 1, 2014
c) make the entry Chief makes when it purchases the bonds on January 1, 2019
d) make the entry Chief makes when it receives its first interst payment on July 1 2019
e) make the necessary worksheet entries needed in 2019
f) In 2019, Patriot reported income of $300,000 (unconsolidated) and Chief reported income
of $25,000. What is consolidated income?
g) make the necessary worksheet entries needed in 2020
h) in 2020, Patriot reported income of $300,000 (unconsolidated) and Chief reported income
of $25,000. What is consolidated income?

Solutions

Expert Solution

Solution:
Date Account Title and Description Debit Credit
Requirment-(a)
1-Jan-14 Cash 530,000
      Premium on Bonds Payable 30,000
      Bonds Payable 500,000
(To record issuance of 8% semi annual 20 year bonds at premium)
Requirment-(b)
1-Jul-14 Interest Expenses (500,000 x 8% x 0.5 Year) 20,000
Premium on bonds payable 750
      Cash 20,750
(to record interest expenses payment and amortisation of Primium on bonds payable (30,000 x 0.5/20 year))
Requirment-(c)
1-Jan-19 Investment in Patriot bonds 500,000
      Discounts on Investment in bonds 15,000
      Cash 485,000
(To record purchase of Patriot bonds at discounts)
Requirment-(d)
1-Jul-19 Cash 19,500
Discounts on Investment in bonds 500
        Interest income (500,000 x 8% x 0.5 year) 20,000
(To record interest income and amortization of Discount on investment in Patriot bonds (15,000 x 0.5 year/15 years)

ekkarill92 answered 2 months ago
Next > < Previous

Related Solutions

On January 1 2000 The Patriot Company purchased all of the stock of the Chief Company...
On January 1 2000 The Patriot Company purchased all of the stock of the Chief Company at book value Patriot accounts for its investment in Chief using the initial value method and Chief does not pay dividends On January 1, 2014 Patriot Company issued (sold) $500,000 8% semi-annual bonds for $530,000 These 20 year bonds pay interest on July 1 and January 1 of each year. Patriot uses straight-line amortization On January 1, 2019 Chief Company purchased the Patriot bonds...
In 2000, The James Bond Company purchased all of the stock of the 007 Company at...
In 2000, The James Bond Company purchased all of the stock of the 007 Company at book value James Bond accounts for this investment using the initial value method and 007 Company does not pay any dividends. On 1/1/2015 The James Bond Company issued (sold) 400; 10% $1000 bonds for $440,000. These 20 year bonds pay interest each July 1 and January 1.   James Bond Company uses straight line amortization for bond interest On 1/1/2018 The 007 Company purchased all...
In 2000, The James Bond Company purchased all of the stock of the 007 Company at...
In 2000, The James Bond Company purchased all of the stock of the 007 Company at book value. James Bond accounts for this investment using the initial value method and 007 Company does not pay any dividends. On 1/1/2015 The James Bond Company issued (sold) 400; 10% $1000 bonds for $440,000. These 20 year bonds pay interest each July 1 and January 1. James Bond Company uses straight line amortization for bond interest On 1/1/2018 The 007 Company purchased all...
On January 1, 2000 Apple Company acquired all of the stock of Pear Company at book...
On January 1, 2000 Apple Company acquired all of the stock of Pear Company at book value. Apple accounts for its investment in Pear using the initial value method and Pear doesn't pay any dividends. On January 1st 2015 Pear Company issued $1,000,000 face value bonds for $930,000 These 7% bonds pay interest each July 1 and January 1. Pear uses straight line amortization on these 20 year bonds. On January 1, 2020, Apple Company acquired all of the Pear...
On January 1, 2005 Able Company purchased all of the stock of Baker Company. On January...
On January 1, 2005 Able Company purchased all of the stock of Baker Company. On January 1, 2010, Able purchased a piece of equipment for $50,000. This equipment is expected to last 8 years with a 2000 salvage. On January 1, 2011 Able sold the equipment to Baker for $50,000. Baker believes the asset has 7 years of life remaining and a $1,000 salvage. On January 1, 2013 Baker sold the equipment to Cat Company for $30,000. REQUIRED: A) PREPARE...
In 2000, the Gandoff Company purchased all of the outstanding stock of Bilbo Company at book...
In 2000, the Gandoff Company purchased all of the outstanding stock of Bilbo Company at book value. Gandoff accounts for its investment in Bilbo under the initial value method and Bilbo pays no dividends In 2016, Gandoff sold inventory to Bilbo Co for $600,000 on credit. This merchandise had cost Gandoff $300,000. At the end of 2016 Bilbo had not sold any of this merchandise nor had they paid Gandoff for the merchandise In 2017 Bilbo paid off Gandoff and...
1)   On January 1, 2005 Able Company purchased all of the stock of Baker Company. On...
1)   On January 1, 2005 Able Company purchased all of the stock of Baker Company. On January 1, 2010, Able purchased a piece of equipment for $50,000. This equipment is expected to last 8 years with a 2000 salvage. On January 1, 2011 Able sold the equipment to Baker for $50,000. Baker believes the asset has 7 years of life remaining and a $1,000 salvage. On January 1, 2013 Baker sold the equipment to Cat Company for $30,000.   Make all...
On January 1, 20X8, Patriot Company acquired 100 percent of Stryder Company for $220,000 cash. The...
On January 1, 20X8, Patriot Company acquired 100 percent of Stryder Company for $220,000 cash. The trial balances for the two companies on December 31, 20X8, included the following amounts: Patriot Corp. Stryder Corporation Debit Credit Debit Credit Cash $ 50,000 $ 30,000 Accounts Receivable 60,000 40,000 Inventory 75,000 80,000 Land 60,000 40,000 Buildings and Equipment 300,000 120,000 Investment in Stryder Company 256,000 Cost of Goods Sold 270,000 170,000 Depreciation Expense 30,000 12,000 Other Expenses 80,000 63,000 Dividends Declared 40,000...
On January 1, 2011, Parent Company Purchased 80% of the common stock of Subsidiary Company for...
On January 1, 2011, Parent Company Purchased 80% of the common stock of Subsidiary Company for $402,000. On this date, Subsidiary had total owners' equity of $440,000. Land was undervalued by $20,000, Equipment with a 5-year remaining life was undervalued by $15,000 and inventory was undervalued by $10,000. Any other excess of cost over book value is due to goodwill. Parent accounts for its investment in Subsidiary using the simple equity method. 1) Prepare the Determination and Distribution of Excess...
On January 1, 20X8, Parent Company purchased 75% of the common stock of Subsidiary Company for...
On January 1, 20X8, Parent Company purchased 75% of the common stock of Subsidiary Company for $360,000. On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $20,000, $130,000, and $200,000, respectively. Any excess of cost over book value is due to goodwill. Parent accounts for the Investment in Subsidiary using cost method. On January 1, 20X8, Subsidiary sold $100,000 par value of 6%, ten-year bonds for $97,000. The bonds pay interest semi-annually on January...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT