Able Company issued $690,000 of 7 percent first mortgage bonds on January 1, 20X1, at 103. The bonds mature in...

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Able Company issued $690,000 of 7 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 $460,000 of Able’s bonds from the original purchaser on January 1, 20X5, for $454,000. Prime owns 70 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. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.)

  • Record the entry to eliminate the effects of the intercompany ownership in Able bonds for 20X5.
  • Record the entry to eliminate the intercompany interest receivables/payables for 20X5.
  

 

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