In: Accounting
Wood Corporation owns 70 percent of Carter Company’s voting shares. On January 1, 20X3, Carter sold bonds with a par value of $645,000 at 98. Wood purchased $430,000 par value of the bonds; the remainder was sold to nonaffiliates. The bonds mature in five years and pay an annual interest rate of 8 percent. Interest is paid semiannually on January 1 and July 1.
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PART A | |||
Interest on bonds payable | $ 51,600.00 | ||
Discount Amortization | $ 2,580.00 | ||
Interst + Amortization | $ 54,180.00 | ||
No. of years to amortize | $ 18,060.00 | ||
PART B | |||
DATE | PARTICULARS | DEBIT | CREDIT |
01.01.2014 | Cash | $ 17,200.00 | |
Interest receivable | $ 17,200.00 | ||
(to record interest receivable) | |||
01.07.2014 | Cash | $ 17,200.00 | |
Inv in C company bonds | $ 860.00 | ||
Interest receivable | $ 18,060.00 | ||
(to record interest receivable) | |||
31.12.2014 | Interest receivable | $ 17,200.00 | |
Investment in C company bonds | $ 860.00 | ||
Interst income | $ 18,060.00 | ||
PART C | |||
DATE | PARTICULARS | DEBIT | CREDIT |
Bonds Payable | $ 430,000.00 | ||
Interest income | $ 36,120.00 | ||
Investment in C company bonds | $ 424,840.00 | ||
Bonds discount | $ 5,160.00 | ||
Interest income | $ 36,120.00 | ||
Interest payable | $ 17,200.00 | ||
Interest receivable | $ 17,200.00 | ||