Par Corporation holds 60 percent of Short Publishing Company’s voting shares. Par issued $500,000 of 10...

Par Corporation holds 60 percent of Short Publishing Company’s voting shares. Par issued $500,000 of 10 percent (paid semiannually) bonds with a 10-year maturity on January 1, 20X2, at 90. On January 1, 20X8, Short purchased $100,000 of the Par bonds for $106,000. Partial trial balances for the two companies on December 31, 20X8, are as follows:

	Par Corporation		Short Publishing Company
Investment in Short Publishing Company Stock	$	141,000
Investment in Par Corporation Bonds			$	104,676
Bonds Payable		500,000
Discount on Bonds Payable		21,289
Interest Expense		55,626
Interest Income				8,676
Interest Payable		25,000
Interest Receivable				5,000

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. Round your answers to nearest whole dollar.)

A

Record the entry to eliminate the effects of the intercompany ownership in bonds for 20X8.
B

Record the entry to eliminate the intercompany interest receivables/payables for 20X8.

Solutions

Expert Solution

Record the entry to eliminate the effects of the intercompany ownership in bonds for 20X8.

Record the entry to eliminate the intercompany interest receivables/payables for 20X8.

Refer to the below image for more detailed solution with calculations.

ekkarill92 answered 8 months ago

Next > < Previous

Related Solutions

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...

Poison Corporation holds 70 percent of Snake Company’s voting common shares but none of its preferred...

Poison Corporation holds 70 percent of Snake Company’s voting common shares but none of its preferred shares. Summary balance sheets for the companies on December 31, 20X1, are as follows: Poison Corporation Snake Company Assets Cash $ 20,000 $ 29,000 Accounts Receivable 32,000 42,000 Inventory 120,000 74,000 Buildings and Equipment 295,000 215,000 Less: Accumulated Depreciation (138,000 ) (63,000 ) Investment in Snake Company 123,900 Total Assets $ 452,900 $ 297,000 Liabilities and Owners’ Equity Accounts Payable $ 77,900 $ 64,000...

Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 25,000 computer...

Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Schedule for $94 each. Schedule sold 7,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems. Required: a. What amounts of cost of goods sold did Planner and Schedule record...

Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 27,000 computer...

Planner Corporation owns 60 percent of Schedule Company’s voting shares. During 20X3, Planner produced 27,000 computer desks at a cost of $96 each and sold 12,000 of them to Schedule for $108 each. Schedule sold 8,000 of the desks to unaffiliated companies for $136 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $146 each. Both companies use perpetual inventory systems. Required: a. What amounts of cost of goods sold did Planner and Schedule record...

Karlow Corporation owns 60 percent of Draw Company’s voting shares. During 20X3, Karlow produced 27,000 computer...

Karlow Corporation owns 60 percent of Draw Company’s voting shares. During 20X3, Karlow produced 27,000 computer desks at a cost of $86 each and sold 12,000 of them to Draw for $98 each. Draw sold 8,000 of the desks to unaffiliated companies for $142 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $152 each. Both companies use perpetual inventory systems. a. What amounts of cost of goods sold did Karlow and Draw record in...

Parent Company holds 85 percent of Surrogate Company’s voting common shares. On December 31, 20X8, Parent...

Parent Company holds 85 percent of Surrogate Company’s voting common shares. On December 31, 20X8, Parent recorded a loss of $14,000 on the sale of equipment to Surrogate. At the time of the sale, the equipment’s estimated remaining economic life was eight years. Required: a. Will consolidated net income be increased or decreased when consolidation entries associated with the sale of equipment are made at December 31, 20X8? By what amount? b. Will consolidated net income be increased or decreased...

Plexis Corporation holds 70 percent of Solar Company's voting common shares, acquired at book value, but...

Plexis Corporation holds 70 percent of Solar Company's voting common shares, acquired at book value, but none of its preferred shares. At the date of acquisition, the fair value of the noncontrolling interest was equal to 30 percent of the book value of Solar Company. Summary balance sheets for the companies on December 31, 20X5, are as follows: Plexis Corp. Solar Company Cash and Receivables $ 70,000 $ 55,000 Inventory 60,000 35,000 Buildings and Equipment (net) 180,000 160,000 Investment in...

Brown Corporation holds 70 percent of Transom Company’s voting common stock. On January 1, 20X2, Transom...

Brown Corporation holds 70 percent of Transom Company’s voting common stock. On January 1, 20X2, Transom paid $360,000 to acquire a building with a 15-year expected economic life. Transom uses straight-line depreciation for all depreciable assets. On December 31, 20X7, Brown purchased the building from Transom for $180,000. Brown reported income, excluding investment income from Transom, of $135,000 and $150,000 for 20X7 and 20X8, respectively. Transom reported net income of $12,000 and $48,000 for 20X7 and 20X8, respectively. Required: a....

Pretzel Corporation owns 60 percent of Stick Corporation’s voting shares. On January 1, 20X2, Pretzel Corporation...

Pretzel Corporation owns 60 percent of Stick Corporation’s voting shares. On January 1, 20X2, Pretzel Corporation sold $180,000 par value, 6 percent first mortgage bonds to Stick for $185,000. The bonds mature in 10 years and pay interest semiannually on January 1 and July 1. 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. Do...

Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4,...

Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 57,000 Playday doghouses for $20 each and sold 42,000 of them to Saturn for $25 each. Saturn sold 35,000 of the doghouses to retail establishments prior to December 31, 20X4, for $40 each. Both companies use perpetual inventory systems. Required: a. Prepare all journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4. (If no entry...

Subjects