Cairns owns $75$ percent of the voting stock of Hamilton, Incorporated. The parent$’$s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.

On January $1,2020,$ Hamilton sold $$1,400,000$ in $10-$year bonds to the public at $110.$ The bonds had a cash interest rate of $7$ percent payable every December $31.$ Cairns acquired $35$ percent of these bonds at $92$ percent of face value on January $1,2022.$ Both companies utilize the straight$-$line method of amortization.

Required:

Prepare the consolidation worksheet entries to recognize the effects of the intra$-$entity bonds at each of the following dates.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

December $31,2022$

December $31,2023$

December $31,2024$

 

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No 1 Date Answer is not complete. Accounts December 31, 202 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense 2 December 31, 202 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Investment in Hamilton 3 December 31, 202 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Investment in Hamilton Debit Credit No 1 Date Answer is not complete. Accounts December 31, 202 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense 2 December 31, 202 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Investment in Hamilton 3 December 31, 202 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Investment in Hamilton Debit Credit

Answer rating: 100% (QA)

prepare the consolidation worksheet entries for Cairns owning 75 of Hamilto... View the full answer