need to fix this advanced consolidation problem

jnuvqund
timer Asked: Jan 29th, 2016

Question Description

This are advanced consolidation entry. few parts are already done. 

was try this in different ways but can't get the correct answer. if you able to make it done. please help me. 

please check the attachments below. 

accountingwk8hw9__1_.docx
accounting_wk_8_hw___9.docx

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Able Company issued $720,000 of 10 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Able’s bonds from the original purchaser on December 31, 20X5, for $473,000. 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%.) 1. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X5. 2. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X5. 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%.) 1. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X6. 2. Record the entry to eliminate the intercompany interest receivables/payables for 20X6. Solution: a. Event Account title Debit $ Bonds Payable 480,000 Premium on Bonds Payable 10,800 Credit $ Investment in A Company bonds 473,000 Gain on Bond Retirement 17,800 Interest Payable Interest Receivable [(480,000 x 1.03) – 480,000] x 15/20 = $10,800 10,800 + 480,000 - 473,000 = $17,800 480,000 x 10% x ½ = $24,000 24,000 24,000 b. Event Account title Debit $ Bonds Payable 480,000 Premium on Bonds Payable 10,080 interest income 48,320 Credit $ Investment in Able Company bonds 473,200 Interest Expense 47,400 Investment in Able Co 10,680 NCI in NA of Able Co. 7,120 Interest Payable Interest Receivable 10,800 – [10,800 / (15 x 2)] x 2 = $10,080 473,000 + ($100 x 2 = 473,200 48,000 – (300 x 2) = 47,400 17,800 x 0.60 = 10,680 17,800 x 0.40 = 7,120 480,000 x 10% x ½ = $24,000 24,000 24,000 Able Company issued $720,000 of 10 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Able’s bonds from the original purchaser on December 31, 20X5, for $473,000. 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%.) 1. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X5. 2. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X5. 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%.) 1. Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X6. 2. Record the entry to eliminate the intercompany interest receivables/payables for 20X6. Solution: a. Event Account title Debit $ Bonds Payable 480,000 Premium on Bonds Payable 7,000 Credit $ Investment in A Company bonds 473,000 Gain on Bond Retirement 14,000 Interest Payable Interest Receivable 480,000 x 10% x ½ = $24,000 24,000 24,000 b. Event Account title Debit $ Bonds Payable 480,000 Premium on Bonds Payable 7,000 interest income 24,000 Credit $ Investment in Able Company bonds 473,000 Interest Expense 24,000 Investment in Able Co 7,000 NCI in NA of Able Co. 7,000 Interest Payable Interest Receivable 480,000 x 10% x ½ = $24,000 24,000 24,000 Able Company issued $720,000 of 10 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Able's bonds from the original purchaser on December 31, 20X5, for $473,000. 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%.) Event Accounts Debit Credit 1 Bonds payable 480,000 Premium on bonds payable 7,000 X Investment in Able Company bonds 473,000 Gain on bond retirement 14,000X 2 Interest payable 24,000 Interest receivable 24,000 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%.) Event Accounts Debit Credit 1 Bonds payable 480,000 Premium on bonds payable 7,000X Interest income 24,000X Investment in Able Company bonds 473,200X Interest expense 24,000 X Investment in Able Company 7,000X NCI in NA of Able Company 7,000X 2 24,000 Interest payable Interest receivable 24,000 Able Company issued $720,000 of 10 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $480,000 of Able's bonds from the original purchaser on December 31, 20X5, for $473,000. 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%.) Event Accounts Debit Credit 1 Bonds payable 480,000 Premium on bonds payable 10,800X Investment in Able Company bonds 473,000 Gain on bond retirement 17,800X 2 Interest payable 24,000 Interest receivable 24,000 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%.) Event Accounts Debit Credit 1 Bonds payable 480,000 Premium on bonds payable 10,080X Interest income 48,320X Investment in Able Company bonds 473,200X Interest expense 47,400X Investment in Able Company 10,680X NCI in NA of Able Company 7,120X Interest payable 24,000 Interest receivable 24,000 N
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