In 2009 Yoda Company purchased all of the outstanding stock of SOLO Company at book value. Yoda accounts for its purchase of SOLO using initial value and SOLO does not pay any dividends.
On January 1 2011 SOLO issued (sold) $1,000,000 8% 10 year bonds for $1,030,000. These bonds pay interest on July 1 and January 1 of each year.
On January 1, 2016 Yoda purchased all of the SOLO bonds for $985,000.
Required:
a) Make the journal entry solo makes when it issues the bonds in 2011.
b) Make the journal entry solo makes on July 1, 2011 (solo uses straight line amortization.)
c) Make the entry Yoda makes when it buys the solo bonds.
d) Make the entry Yoda makes when it receives its first interest payment on July 1, 2016.
e) Make the necessary worksheet entries needed in 2016 connected with this bond.