Use the Following Information to Answer the Question(s)below

question 3

Multiple Choice

Use the following information to answer the question(s) below.
Plenty Corporation issued six thousand,$1,000 par,6% bonds on January 1,2010,at par.Interest is paid on January 1 and July 1 of each year;the bonds mature on January 1,2015.On January 2,2012,Scrawn Corporation,a 75%-owned subsidiary of Plenty,purchased 3,000 of the bonds on the open market at 102.50.Plenty's separate net income for 2012 included the annual interest expense for all 3,000 bonds.Scrawn's separate net income for 2012 was $400,000,which included the bond interest received on July 1 as well as the accrual of bond interest revenue earned on December 31.Both companies use straight-line amortization of bond discounts/premiums.
-Using the original information,the elimination entries on the consolidation working papers prepared on December 31,2012 included at least

• A)debit to Bond Interest Expense for $360,000.
• B)credit to Bond Interest Expense for $180,000 and a debit to Bond Interest Payable for $90,000.
• C)credit to Bond Interest Receivable for $180,000.
• D)debit to Bond Interest Revenue for $360,000.

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Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing firms and the economy to adjust to changes fully.

Sales

encompasses the transactions of selling goods or services to consumers in exchange for money or other compensations.

Fixed Costs

Expenses that do not change with the level of output or sales over a relevant period, such as rent, salaries, and loan payments.

Short Run

A period in which at least one input, such as plant size or capital equipment, in the production process is fixed.