Stang Corporation issued to Bradley Company $400,000 par value, 10-year bonds with a coupon rate of 12 percent on January 1, 2005, at 105. The bonds pay interest semiannually on July 1 and January 1. On January 1, 2010, Purple Corporation purchased $100,000 of the bonds from Bradley for $104,900. Purple owns 65 percent of the voting common shares of Stang and prepares consolidated financial statements.
a. Prepare the worksheet elimination entry or entries needed to remove the effects of the intercorporate bond ownership in preparing consolidated financial statements for 2010.
Show and label calculations for the following accounts:
Premium on Bonds Payable
Investment in Stang Corporation Bonds
Interest Income
Interest Expense
Investment in Stang Corporation
NCI in NA of Stang Corporation