Computations Relating to Bond Purchase from Nonaffiliate (Effective Interest...

Computations Relating to Bond Purchase from Nonaffiliate

(Effective Interest Method)

Bliss Perfume Company issued $300,000 of 10 percent bonds on January 1, 20X2, at 110. The bonds mature 10 years from issue and have semiannual interest payments on January 1 and July 1. Parsons Corporation owns 80 percent of Bliss Perfume stock. On January 1, 20X4, Parsons purchased $100,000 par value of Bliss Perfume bonds in the securities markets for $106,200.

Partial trial balances for the two companies on December 31, 20X4, are as follows:

Required

Prepare the necessary worksheet elimination entries as of December 31, 20X4, to remove the effects of the intercorporate bond ownership.