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On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond

On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidiary. On January 2. 20x2. Senn Co purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate) Theses bonds had been issued at per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. interests are paid annually Senn Co. uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2 Account Debit Credit Bnterest income Bonds payable Interest expense Investment in Penn Bond

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 5E
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On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidlary). On January 2. 20x2. Senn Co. purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate Theses bonds had been issued ot per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. Interests are paid annually. Senn Co, uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2. Account Debit Credit Interest Income Bonds payable Interest expense Investment in Penn Bond Gain on retiment Q2. What is the consolidated net income?
Transcribed Image Text:On January 1, 20x2, Penn Co (parent purchased 90% of the outstanding common shares of Senn Co. (Subsidlary). On January 2. 20x2. Senn Co. purchased $20,000 face amount 8% of bond of Penn Co. from outside investors for $18.000 to yleld 10% (market rate Theses bonds had been issued ot per (tace amount $20000) by Penn Co. Senn Co intends to hoid the bonds until maturity Senn Co reported net income of $5.000 and Penn Company reported separate income $8,000 during 20x2. Interests are paid annually. Senn Co, uses effective interest method for interest income calculation Q1. Please complete the following consolidation entry at December 31, 20x2. Account Debit Credit Interest Income Bonds payable Interest expense Investment in Penn Bond Gain on retiment Q2. What is the consolidated net income?
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