Saratoga Company owns 80% of the outstanding common stock of Windsor Company. On May 1, 2013, Windsor

Question:

Saratoga Company owns 80% of the outstanding common stock of Windsor Company. On May 1, 2013, Windsor Company arranges a 1-year, $50,000 loan from Saratoga Company. The loan agreement specifies that interest will accrue at the rate of 6% per annum and that all interest will be paid on the maturity date of the loan. The financial reporting period ends on December 31, 2013, and the note originating from the loan remains outstanding.

1. Prepare the entries that both companies would have made on their separate books, including the accrual of interest.

2. Prepare the eliminations, in entry form, that will be made on a consolidated worksheet pre- pared as of December 31, 2013.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...