Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1,20X3,which Star Corporation purchased.On July 1,20X7,Pluto Corporation purchased $120,000 face value of Saturn bonds from Star.The bonds pay 12 percent interest annually on December 31.The preparation of consolidated financial statements for Saturn and Pluto at December 31,20X9,required the following consolidation entry:

-Based on the information given above,if 20X9 consolidated net income of $50,000 would have been reported without the consolidation entry provided,what amount will actually be reported?
A)$47,900
B)$48,200
C)$49,400
D)$48,800

Question

Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1,20X3,which Star Corporation purchased.On July 1,20X7,Pluto Corporation purchased $120,000 face value of Saturn bonds from Star.The bonds pay 12 percent interest annually on December 31.The preparation of consolidated financial statements for Saturn and Pluto at December 31,20X9,required the following consolidation entry:
 
-Based on the information given above,if 20X9 consolidated net income of $50,000 would have been reported without the consolidation entry provided,what amount will actually be reported?
A)$47,900 
B)$48,200 
C)$49,400 
D)$48,800

Quizplus · Accepted Answer

The Answer of Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1,20X3,which Star Corporation purchased.On July 1,20X7,Pluto Corporation purchased $120,000 face value of Saturn bonds from Star.The bonds pay 12 percent interest annually on December 31.The preparation of consolidated financial statements for Saturn and Pluto at December 31,20X9,required the following consolidation entry:
 
-Based on the information given above,if 20X9 consolidated net income of $50,000 would have been reported without the consolidation entry provided,what amount will actually be reported?
A)$47,900 
B)$48,200 
C)$49,400 
D)$48,800

Saturn Corporation Issued $300,000 Par Value 10-Year Bonds at 107