LO 8-2 E8-2A Computation of Transfer Price (Straight-line Method) Nettle Corporation sold $100,000 par value, 10-year fi

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Lo 8 2 E8 2a Computation Of Transfer Price Straight Line Method Nettle Corporation Sold 100 000 Par Value 10 Year Fi 1 (187.01 KiB) Viewed 35 times

LO 8-2 E8-2A Computation of Transfer Price (Straight-line Method) Nettle Corporation sold $100,000 par value, 10-year first mortgage bonds to Timberline Corpora- tion on January 1, 20X5. The bonds, which bear a nominal interest rate of 12 percent, pay interest semiannually on January 1 and July 1. The entry to record interest income by Timberline Corpora- tion on December 31, 20X7, was as follows: Interest Receivable 6,000 Interest Income 5,750 Investment in Nettle Corporation Bonds 250 Timberline Corporation owns 65 percent of the voting stock of Nettle Corporation, and consoli- dated statements are prepared on December 31, 20X7. Required a. What was the original purchase price of the bonds to Timberline Corporation? b. What is the balance in Timberline's bond investment account on December 31, 20X7? c. Give the worksheet consolidation entry or entries needed to remove the effects of the intercom- pany ownership of bonds in preparing consolidated financial statements for 20X7.