Question

Please explain. On 1/1/2019, Allie Company issued bonds payable of $500,000 at 8%. It was sold...

Please explain.

On 1/1/2019, Allie Company issued bonds payable of $500,000 at 8%. It was sold at $464,000 with effective interest rate of 9%. On 1/1/2020, Choco purchased all of Allie’s bond for $532,000 cash with effective interest at 7% and Allie’s bonds payable has been effectively retired.   

What is Allies’ book value of $500,000 bonds payable on 1/1/2020?  

Prepare a journal entry that Choco will record on 1/1/2020 regarding purchase of Allie’s bond.

Compute and specify the consolidated gain or loss on a consolidated income statement for at the end of 2020  

Prepare a journal entry that Allie will record for bond interest expense on 12/31/2020.  

Prepare a journal entry that Choco will record for bond interest income on 12/31/2020.

Prepare consolidation entry B on 12/31/2020?

Prepare a journal entry that Allie will record for bond interest expense on 12/31/2021.

Prepare a journal entry that Choco will record for bond interest income on 12/31/2021.

Prepare consolidation entry B on 12/31/2021?

Business   Accounting   
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Homework Answers

Answer #1

Carrying Amount in the books of Allie as on 1/1/2020 is $ 472,480.

Below are the Journal entnries in the books of Choco on 1/1/2020, 12/31/2020 and 21/31/2021

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