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

question 24

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, 2012, at par. Interest is paid on January 1 and July 1 of each year; the bonds mature on January 1, 2017. On January 2, 2014, 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 2014 included the annual interest expense for all 3,000 bonds. Scrawn's separate net income for 2014 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 balances for the Bonds Payable and Bond Interest Payable accounts,respectively,on the consolidated balance sheet for December 31,2015 were

• A)$3,000,000 and $ 90,000.
• B)$3,000,000 and $180,000.
• C)$6,000,000 and $ 90,000.
• D)$6,000,000 and $180,000.

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Definitions:

Proprietorship

A business owned by a single individual who is responsible for its assets and liabilities.

Personal Assets

Items of value owned by an individual, including cash, real estate, investments, and personal property.

Accounting Records

Documentation and books involved in preparing financial statements, including ledgers, journals, and other evidence of transactions.

Allowance For Doubtful Accounts

A contra asset account on a company's balance sheet that represents the estimated portion of accounts receivable that may not be collectible.