Apple Corporation holds 60 percent of Shortway Publishing Company’s voting shares. Apple issued $590,000 of 12...

Apple Corporation holds 60 percent of Shortway Publishing Company’s voting shares. Apple issued $590,000 of 12 percent bonds with a 10-year maturity on January 1, 20X2, at 92. On January 1, 20X8, Shortway purchased $118,000 of the Apple bonds for $124,000. Partial trial balances for the two companies on December 31, 20X8, are as follows:

Note: Assume using straight-line amortization of bond discount or premium.

	Apple Corporation		Shortway Publishing Company
Investment in Shortway Publishing Company Stock	$	134,000
Investment in Apple Corporation Bonds			$	124,000
Bonds Payable		590,000
Discount on Bonds Payable		18,000
Interest Expense		61,000
Interest Income				8,100
Interest Payable		20,000
Interest Receivable				7,080

Required:

Prepare the worksheet consolidation entry or entries needed on December 31, 20X8, to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Expert Solution

	Trailbalance
Account titles	Apple Corporation	Shortway Publishing Company	Debit	Credit	Balance sheet

Investment in Shortway Publishing Company Stock	1,34,000	-	-	1,34,000	-
Investment in Apple Corporation Bonds	-	1,24,000	1,24,000	-	-
Bonds payable	5,90,000	-	-	-	5,90,000
Discount on Bonds Payable	18,000	-	-	-	18,000
Interest Expense	61,000	-	-	-	61,000
Interest Income	-	8,100	-	-	8,100
Interest Payable	20,000	-	-	-	20,000
Interest Receivable	-	7,080	-	-	7,080


Common Stock A/c Dr 1,34,000
To Investment in Shortway publishing Company stock A/c 1,34,000

ekkarill92 answered 1 year ago

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