Suspect Company issued $$600,000$ of $9$ percent first mortgage bonds on January $1,201,$ 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 December $31,205,$ for $$397,000.$ 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 ownershi$|$

consolidated financial statements for $205.$

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

Consolidation

Worksheet Entries

A

Record the entry to eliminate the effects of the intercompany ownership in

bonds for $20$X$5.$

Note: Enter debits before credits.