Moon Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20

Question

Moon Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. Sun Corporation owns 65% of Moon's voting shares. On Jan 1, 20X7, Sun Corporation purchased $120,000 face value of Moon bonds from Star for $118,020. On the date Sun purchased the bonds, the bonds' carrying value on Moon's book was $126,019. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Moon and Sun at December 31, 20X9, required the following consolidating entry

Explanation / Answer

Journal

Date Account Name Debit Credit Dec 31 Bonds payable 120000           Investment in Bonds 118020           Discount on Bonds Payable 1980 Dec 31 Interest Payable 14400           Interest expense 14400 Dec 31 Interest Payable 14400           Interest Receivable 14400

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