473.2 Purse Corporation owns 70 percent of Scarf Companys voting shares. On January 1, 20X3,...
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Accounting
473.2
Purse Corporation owns 70 percent of Scarf Companys voting shares. On January 1, 20X3, Scarf sold bonds with a par value of $630,000 at 98. Purse purchased $420,000 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:
What amount of interest expense should be reported in the 20X4 consolidated income statement?
______
Prepare the journal entries Purse recorded during 20X4 with regard to its investment in Scarf bonds. accounts are correct, just need amounts.
Prepare all worksheet consolidation entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 20X4. accounts are correct, just need amounts.
\begin{tabular}{|l|l|l|l|l|} \hline \multicolumn{1}{|c|}{ No } & \multicolumn{1}{|c|}{ Date } & & \multicolumn{1}{|c|}{ Debit } & \multicolumn{1}{c|}{ Credit } \\ \hline 1 & January 1,204 & Cash & & \\ \hline & & Interest receivable & & \\ \hline & & & & \\ \hline 2 & July 1,204 & Cash & & \\ \hline & & Investment in Scarf Company bonds & & \\ \hline & & Interest income & & \\ \hline & & & & \\ \hline 3 & December 31,20 & Interest receivable & & \\ \hline & & Investment in Scarf Company bonds & & \\ \hline & & Interest income & & \\ \hline \end{tabular} Interest income Required C > \begin{tabular}{|l|l|l|c|c|} \hline \multicolumn{1}{|c|}{ No } & Event & \multicolumn{1}{|c|}{ Accounts } & Debit & Credit \\ \hline A & 1 & Bonds payable & & \\ \hline & & Interest income & & \\ \hline & & Investment in Scarf Company bonds & & \\ \hline & & Bond discount & & \\ \hline & & Interest expense & & \\ \hline & & & & \\ \hline B & 2 & Interest payable & & \\ \hline & & Interest receivable & & \\ \hline \end{tabular} Required B
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