Vontkins Inc

question 63

Multiple Choice

Vontkins Inc.owned all of Quasimota Co.The subsidiary had bonds payable outstanding on January 1, 2017, with a book value of $265,000.The parent acquired the bonds on that date for $288,000.Subsequently, Vontkins reported interest income of $25,000 in 2017 while Quasimota reported interest expense of $29,000.Consolidated financial statements were prepared for 2018.What adjustment would be required for the retained earnings balance as of January 1, 2018?

• A) Reduction of $27,000.
• B) Reduction of $4,000.
• C) Reduction of $19,000.
• D) Reduction of $30,000.
• E) Reduction of $20,000.

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