Able company issued 1080000 of 9 percent first mortgage, Ask an Expert

Accounting

Able Company issued $1,080,000 of 9 percent first mortgage bonds on January 1, 20X1, at 104. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $720,000 of Able’s bonds from the original purchaser on December 31, 20X5, for $717,000. Prime owns 60 percent of Able’s voting common stock.

Required:

a. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your market rate of interest to 3 decimals. For example, .0547523 should be rounded to 5.475%.)

b. Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your market rate of interest to 3 decimals. For example, .0547523 should be rounded to 5.475%.)

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M92040915

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