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Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 7MCQ
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Question
i need the answer quickly
![Purse Corporation owns 70 percent of Scarf Company's voting shares. On January 1, 20X3, Scarf sold bonds with a par value of
$652,500 at 98. Purse purchased $435,000 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.
Required:
a. What amount of Interest expense should be reported in the 20X4 consolidated income statement?
b. Prepare the journal entries Purse recorded during 20X4 with regard to its Investment in Scarf bonds.
c. Prepare all worksheet consolidation entries needed to remove the effects of the Intercorporate bond ownership in preparing
consolidated financial statements for 20X4.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required A
Required B Required C
Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing
consolidated financial statements for 20X4.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
your intermediate calculations. Round your final answers to nearest whole dollar.
A
No
Event
1
Bonds payable
Accounts
Interest income
Investment in Scarf Company bonds
Bond discount
Interest expense
B
2
Interest payable
Interest receivable
< Required B
Required C >
Show less ▲
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe54a3f04-c311-441b-90bd-d82be4041a6b%2Fedb76ee8-f570-46b2-8236-99325e096432%2F9g19ko_processed.png&w=3840&q=75)
Transcribed Image Text:Purse Corporation owns 70 percent of Scarf Company's voting shares. On January 1, 20X3, Scarf sold bonds with a par value of
$652,500 at 98. Purse purchased $435,000 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.
Required:
a. What amount of Interest expense should be reported in the 20X4 consolidated income statement?
b. Prepare the journal entries Purse recorded during 20X4 with regard to its Investment in Scarf bonds.
c. Prepare all worksheet consolidation entries needed to remove the effects of the Intercorporate bond ownership in preparing
consolidated financial statements for 20X4.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required A
Required B Required C
Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing
consolidated financial statements for 20X4.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round
your intermediate calculations. Round your final answers to nearest whole dollar.
A
No
Event
1
Bonds payable
Accounts
Interest income
Investment in Scarf Company bonds
Bond discount
Interest expense
B
2
Interest payable
Interest receivable
< Required B
Required C >
Show less ▲
Debit
Credit
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