Sabu Is a 65%-Owned Subsidiary of Peerless

question 18

Essay

Sabu is a 65%-owned subsidiary of Peerless.On January 1,2010,Sabu issued $1,000,000 of $1,000 face amount 8% bonds at $980 per bond.The bonds have interest payments on December 31 of each year and mature on January 1,2015.On January 1,2011,Peerless purchased all 1,000 bonds on the open market for $1,010 per bond.Straight-line amortization is used by both companies.
Required: With respect to the bonds,use General Journal format to:
1.Record the journal entries on Sabu's books made from 2010 to 2015.
2.Record the journal entries on Peerless' books made from 2010 to 2015.
3.Record the elimination entries for the consolidation working papers for 2010 through 2015.

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Definitions:

Dendritic Morphology

The study of the structure and form of dendrites, which are the branched projections of a neuron.

New Connections

Refers to the formation of novel synaptic connections between neurons in the brain, a process associated with learning and memory.

Synapses

The junctions between neurons through which signals are transmitted; they can be chemical, involving neurotransmitter release, or electrical, through direct ion flow.

Circuitry

The arrangement and interaction of electrical components and pathways through which electrical current flows.