January 1, 20x3, parent held merchandise acquired from subsidiary for $50,000 during 20x3, subsidiary sold merchandise to Parent for $120,000, of which Parent holds $30,000 on December 31, 20X3. Subsidiary's gross profit on sales is 40%. On December 31, 20X3, Parent still owes Subsidiary $5,000 for merchandise. On December 31, 20X1, Parent sold $100,000 par value of 11%, 10-year bonds for $106,232, which resulted in an effective interest rate of 10%. The bonds pay interest semi-annually on June 30 and December 31. Parent uses the effective-interest method of amortization for the premium.

  On December 31, 20X2, Subsidiary repurchased $50,000 par value of the bonds, paying a price equal to par. The bonds are still held on December 31, 20X3.

On December 31, 20X3, Parent sold equipment with a cost of $50,000 and accumulated depreciation of $30,000 to Subsidiary for $40,000. Subsidiary will use the equipment beginning in 20X4.

Required: 

Complete the Figure 5-7 worksheet for consolidated financial statements for the year ended December 31, 20X3. Round all computations to the nearest dollar.

   

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An amortization table for 20X2 and 20X3 is presented below: Cash Interest Interest Expense Premium Amortization Premium Balance Debt Carrying Value 12/31/X1 5,312 5,302 5,292 5,282 6,232 6,044 5,846 5,638 5,420 106,232 106,044 105,846 105,638 105,420 6/30/X2 12/31/X2 5,500 5,500 5,500 5,500 (188) (198) (208) (218) 6/30/X3 12/31/X3 An amortization table for 20X2 and 20X3 is presented below: Cash Interest Interest Expense Premium Amortization Premium Balance Debt Carrying Value 12/31/X1 5,312 5,302 5,292 5,282 6,232 6,044 5,846 5,638 5,420 106,232 106,044 105,846 105,638 105,420 6/30/X2 12/31/X2 5,500 5,500 5,500 5,500 (188) (198) (208) (218) 6/30/X3 12/31/X3 An amortization table for 20X2 and 20X3 is presented below: Cash Interest Interest Expense Premium Amortization Premium Balance Debt Carrying Value 12/31/X1 5,312 5,302 5,292 5,282 6,232 6,044 5,846 5,638 5,420 106,232 106,044 105,846 105,638 105,420 6/30/X2 12/31/X2 5,500 5,500 5,500 5,500 (188) (198) (208) (218) 6/30/X3 12/31/X3 An amortization table for 20X2 and 20X3 is presented below: Cash Interest Interest Expense Premium Amortization Premium Balance Debt Carrying Value 12/31/X1 5,312 5,302 5,292 5,282 6,232 6,044 5,846 5,638 5,420 106,232 106,044 105,846 105,638 105,420 6/30/X2 12/31/X2 5,500 5,500 5,500 5,500 (188) (198) (208) (218) 6/30/X3 12/31/X3