Problem $6-28($Algo$)($LO $6-3)$ Paulina, Incorporated, owns $90$ percent of Southport Company. On January $1,2024,$ Paulina acquires half of Southport's $\backslash (\backslash$$ $860,000\backslash )$ outstanding $13-$year bonds. These bonds had been sold on the open market on January $1,2021,$ at a $12$ percent effective rate. The bonds pay a cash interest rate of $10$ percent every December $31$ and are scheduled to come due on December $31,2033.$ Southport issued this debt originally for $\backslash (\backslash$$ $749,515\backslash ).$ Paulina paid $\backslash (\backslash$$ $487,707\backslash )$ for this investment, indicating an $8$ percent effective yield. Required: a$.$ Assuming that both parties use the effective rate method, what gain or loss from the retirement of this debt should be reported on the consolidated income statement for $2023?$ b$.$ Assuming that both parties use the effective rate method, what balances should appear in the Investment in Southport Bonds account on Paulina's records and the Bonds Payable account of Southport as of December $31,2024?$ c$.$ Assuming that both parties use the straight$-$line method, what consolidation entry would be required on December $31,2024,$ because of these bonds? Assume that the parent is not applying the equity method. Complete this question by entering your answers in the tabs below. Assuming that both parties use the effective rate method, what gain or loss from the retirement of this debt should be reported on the consolidated income statement for $2023?$ Note: Round your intermediate calculations and final answer to the nearest dollar amount.

Paulina, Incorporated, owns $90$ percent of Southport Company. On January $1,2024,$ Paulina acquires half of Southport's $$860,000$

outstanding $13-$year bonds. These bonds had been sold on the open market on January $1,2021,$ at a $12$ percent effective rate. The

bonds pay a cash interest rate of $10$ percent every December $31$ and are scheduled to come due on December $31,2033.$ Southport

issued this debt originally for $$749,515.$ Paulina paid $$487,707$ for this investment, indicating an $8$ percent effective yield.

Required:

Assuming that both parties use the straight$-$line method, what consolidation entry would be required on December $31,2024,$ because of these bonds? Assume that the parent is not applying the equity method.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest dollar amount.

Consolidation Worksheet Entries

$\backslash [$

$1$

$\backslash ]$

Prepare Consolidation Entry $*$B to account for these bonds on December $31,2024.$

Note: Enter debits before credits.