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IceJOKER [234]
3 years ago
9

Fargus Corporation owned 55% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on

the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price. On January 1, 2017, Sanatee sold $1,400,000 in ten-year bonds to the public at 109. The bonds pay a 10% interest rate every December 31. Fargus acquired 50% of these bonds on January 1, 2019, for 95% of the face value. Both companies utilized the straight-line method of amortization.
What balances would need to be considered in order to prepare the consolidation entry in connection with these intra-entity bonds at December 31, 2019, the end of the first year of the intra-entity investment?
Prepare schedules to show numerical answers for balances that would be needed for the entry.( Face value = 560,000)
What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2019?
Business
1 answer:
Nadusha1986 [10]3 years ago
5 0

Answer:

See explanation for the answer.

Explanation:

1.

Balances of bonds payable, bond investment, interest income and interest expense are to be considered

Proceeds from for bonds (1400000*50%*0.95)                   665000

Carrying value of bonds  

Face value (1400000*50%)                                        700000  

Unamortized premium (8/10*(1400000*50%*0.09)) 50400  

Carrying value                                                                  750400

Gain on retirement of bonds                                            85400

2.

General journal                                   Debit                  Credit

Bonds payable                                   700000  

Premium on bonds payable                   44100  

Interest income                                    74375  

Investment in bonds (665000+4375)                          669375

Interest expense                                                          63700

Gain on retirement                                                  85400

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2 years ago
Cherokee Inc. is a merchandiser that provided the following information: Number of units sold 20,000 Selling price per unit $ 30
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In order to find Net Income as per traditional income statement, we will first require to calculate cost of goods sold as below:

Beginning Merchandise Inventory................................................24000

Add: Purchases..................................................................................180000

Less: Ending Merchandise Inventory...........................................(44000)

Cost of Goods Sold............................................................................160000

Traditional Income Statement

Sales................................................................................................................600000

Less: Cost of Goods Sold..........................................................................(160000)

Gross Profit....................................................................................................440000

Less: Selling and Administrative Expenses

Variable Selling Expense.........................................................80000

Variable Admin Expense............................................................40000

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3 years ago
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A travel agency discovers that it has been charged for payments to a print shop drawn on checks written by an unknown third part
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Answer:

Forgery or Alteration Coverage Form.

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The travel agency loss would be covered under Forgery or Alteration coverage form.

Under Commercial Crime insuring agreement, It insures an individual or business against the forgery or alteration of financial instruments e.g promissory notes, drafts, and checks with respect to payment of a sum of money that was made or drawn by the insured or anyone acting on his/her behalf such as next of kin.

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6 0
3 years ago
The following information is available for Ivanhoe Company. April 1 April 30 Raw materials inventory $10,500$14,000 Work in proc
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Answer and Explanation:

The preparation of the cost of goods manufactured schedule for the month of April is presented below

Beginning work-in-process inventory                          $4,840

Manufacturing costs:

Direct materials:                                                  

Beginning inventory                                   $10,500

Purchases                                                    $97,700

Materials available                                      $108,200 

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Direct materials used                                                             $94,200

Direct labor                                                                             $80,300

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Total manufacturing costs:                                                     $336,500

Total costs of work-in-process                                                $341,340

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Less:  Ending work-in-process                                                -$3,700

Cost of goods manufactured                                                   $337,640

Basically we simply the cost of goods manufactured formula

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3 years ago
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