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Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $87,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $91,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Item. Cash & Receivables Inventory Buildings & Equipment Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings Sales. Interest Income Income from Soul Company Stock Total View transaction list Journal entry worksheet A Note: Enter debits before credits. Punk Corporation Event 1 Debit $ 36,000 165,000 408,000 144,702 88,600 86,000 17,000 15,220 27,000 General Journal $987,522 Credit $121,000 125, 100 187,000 Record the entry for the interest income on the bond investment. 120,000 228,000 159,000 4,420 43,002 $987,522 Debit Soul Company b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit Debit $ 50,600 80,000 257,000 79,800 12,000 4,420 17,000 $500,820 Credit > $ 61,000 77,220 87,000 1,600 80,000 50,000 144,000 $500,820

Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $87,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $91,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Item. Cash & Receivables Inventory Buildings & Equipment Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings Sales. Interest Income Income from Soul Company Stock Total View transaction list Journal entry worksheet A Note: Enter debits before credits. Punk Corporation Event 1 Debit $ 36,000 165,000 408,000 144,702 88,600 86,000 17,000 15,220 27,000 General Journal $987,522 Credit $121,000 125, 100 187,000 Record the entry for the interest income on the bond investment. 120,000 228,000 159,000 4,420 43,002 $987,522 Debit Soul Company b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Credit Debit $ 50,600 80,000 257,000 79,800 12,000 4,420 17,000 $500,820 Credit > $ 61,000 77,220 87,000 1,600 80,000 50,000 144,000 $500,820

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 7MCQ
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Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $87,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $91,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Item Cash & Receivables Inventory Buildings & Equipment. Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings. Sales Interest Income Income from Soul Company Stock Total View transaction list Journal entry worksheet < A Note: Enter debits before credits. Punk Corporation Event 1 Debit $36,000 General Journal 165,000 408,000 144,702 88,600 86,000 17,000 15,220 27,000 $987,522 Credit $121,000 125,100 187,000 Record the entry for the interest income on the bond investment. 120,000 228,000 159,000 4,420 43,002 $987,522 b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Debit Soul Company Credit Debit $ 50,600 80,000 257,000 79,800 12,000 4,420 17,000 $500,820 Credit > $ 61,000 77,220 87,000 1,600 80,000 50,000 144,000 $500,820
Transcribed Image Text:Punk Corporation purchased 90 percent of Soul Company's voting common shares on January 1, 20X2, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Soul Company. Punk also purchased $87,000 of 6 percent, five-year bonds directly from Soul on January 1, 20X2, for $91,000. The bonds pay interest annually on December 31. The trial balances of the companies as of December 31, 20X4, are as follows: Item Cash & Receivables Inventory Buildings & Equipment. Investment in Soul Company Stock Investment in Soul Company Bonds Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Bond Premium Common Stock Retained Earnings. Sales Interest Income Income from Soul Company Stock Total View transaction list Journal entry worksheet < A Note: Enter debits before credits. Punk Corporation Event 1 Debit $36,000 General Journal 165,000 408,000 144,702 88,600 86,000 17,000 15,220 27,000 $987,522 Credit $121,000 125,100 187,000 Record the entry for the interest income on the bond investment. 120,000 228,000 159,000 4,420 43,002 $987,522 b. Prepare the journal entry or entries for 20X4 on Punk's books related to its investment in Soul Company bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Debit Soul Company Credit Debit $ 50,600 80,000 257,000 79,800 12,000 4,420 17,000 $500,820 Credit > $ 61,000 77,220 87,000 1,600 80,000 50,000 144,000 $500,820
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