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Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 percent ($67,200) was to be paid on t debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidi of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 5 perc The bond liability had a carrying amount on that date of $820,000. Assume Brant uses the equity method to account internally for i investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (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 nearest whole number.) No Date Answer is complete but not entirely correct. Accounts Debit Credit

Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 percent ($67,200) was to be paid on t debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidi of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 5 perc The bond liability had a carrying amount on that date of $820,000. Assume Brant uses the equity method to account internally for i investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (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 nearest whole number.) No Date Answer is complete but not entirely correct. Accounts Debit Credit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 percent ($67,200) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 5 percent. The bond liability had a carrying amount on that date of $820,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (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 nearest whole number.) Answer is complete but not entirely correct. No Date 1 December 31, 201 Bonds payable Interest income 2 Accounts Loss on retirement of debt Investment in bonds Interest expense Debit Credit 108,624 6,912 x 31,848 136,745 x 10,639 December 31, 202 Bonds payable 108,624 Interest income 6,912 Investment in Zack 31,848 Investment in bonds 136,745 Interest expense 10,639
Transcribed Image Text:Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 percent ($67,200) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2019, Zack Corporation (a wholly owned subsidiary of Brant) purchased $120,000 of these bonds on the open market for $141,000, a price based on an effective interest rate of 5 percent. The bond liability had a carrying amount on that date of $820,000. Assume Brant uses the equity method to account internally for its investment in Zack. a. & b. What consolidation entry would be required for these bonds on December 31, 2019 and December 31, 2021? (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 nearest whole number.) Answer is complete but not entirely correct. No Date 1 December 31, 201 Bonds payable Interest income 2 Accounts Loss on retirement of debt Investment in bonds Interest expense Debit Credit 108,624 6,912 x 31,848 136,745 x 10,639 December 31, 202 Bonds payable 108,624 Interest income 6,912 Investment in Zack 31,848 Investment in bonds 136,745 Interest expense 10,639
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