Vontkins Inc. owned all of Quasimota Co. The subsidiary had bonds payable outstanding on January 1, 2010, with a book value of $265,000. The parent acquired the bonds on that date for $288,000. Subsequently, Vontkins reported interest income of $25,000 in 2010 while Quasimota reported interest expense of $29,000. Consolidated financial statements were prepared for 2011. What adjustment would have been required for the retained earnings balance as of January 1, 2011?
A. Reduction of $27,000.
B. Reduction of $4,000.
C. Reduction of $19,000.
D. Reduction of $30,000.
E. Reduction of $20,000.

Answer rating: 100% (QA)

C Reduction of 19000 Adjustm... View the full answer