Exercise $8-8$A $($Static$)$ Constructive Retirement at Beginning of Year $($Straight$-$Line Method$)$ LO $8-2$ Suspect Company issued $$600,000$ of $9$ percent first mortgage bonds on January $1,20$X$1,$ at $103.$ The bonds mature in $20$ years and pay interest semiannually on January $1$ and July $1.$ Prime Corporation purchased $$400,000$ of Suspect$$s bonds from the original purchaser on January $1,20$X$5,$ for $$396,800.$ Prime owns $60$ percent of Suspect$$s voting common stock. Note: Assume using straight$-$line amortization of bond discount or premium. Required: Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$5.$ Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$6.$

Exercise $8-8$A $($Static$)$ Constructive Retirement at Beginning of Year $($Straight$-$Line Method$)$ LO $8-2$

Suspect Company issued $\backslash (\backslash$$ $600,000\backslash )$ of $9$ percent first mortgage bonds on January $1,20$X$1,$ at $103.$ The bonds mature in $20$ years and pay interest semiannually on January $1$ and July $1.$ Prime Corporation purchased $\backslash (\backslash$$ $400,000\backslash )$ of Suspect's bonds from the original purchaser on January $1,\backslash (20\backslash$times $5\backslash ),$ for $\backslash (\backslash$$ $396,800\backslash ).$ Prime owns $60$ percent of Suspect's voting common stock.

Note: Assume using straight$-$line amortization of bond discount or premium.

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 $20$X$5.$

b$.$ Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$6.$

Complete this question by entering your answers in the tabs below.

Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$5.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$ Exercise $8-8$A $($Static$)$ Constructive Retirement at Beginning of Year $($Straight$-$Line Method$)$ LO $8-2$

Suspect Company issued $\backslash (\backslash$$ $600,000\backslash )$ of $9$ percent first mortgage bonds on January $1,20$X$1,$ at $103.$ The bonds mature in $20$ years and pay interest semiannually on January $1$ and July $1.$ Prime Corporation purchased $\backslash (\backslash$$ $400,000\backslash )$ of Suspect's bonds from the original purchaser on January $1,\backslash (20\backslash$times $5\backslash ),$ for $\backslash (\backslash$$ $396,800\backslash ).$ Prime owns $60$ percent of Suspect's voting common stock.

Note: Assume using straight$-$line amortization of bond discount or premium.

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 $20$X$5.$

b$.$ Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$6.$

Complete this question by entering your answers in the tabs below.

Required $\backslash ($ A $\backslash )$

Prepare the worksheet consolidation entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for $20$X$6.$

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