Question: Suspect Company issued $ 1 , 0 8 0 , 0 0 0 of 9 percent first mortgage bonds on January 1 , 2 0

Suspect Company issued $

1, 080, 000

9

percent first mortgage bonds on January

1, 20

1,

102 .

The bonds mature in

20

years and pay interest semiannually on January

1

and July

1 .

Prime Corporation purchased $

720, 000

of Suspect

s bonds from the original purchaser on January

1, 20

5,

for $

716, 200 .

Prime owns

70

percent of Suspect

s voting common stock.

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

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

6 .

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