Popcorn Corporation Owns 90% of the Outstanding Voting Common Stock

question 10

Essay

Popcorn Corporation owns 90% of the outstanding voting common stock of Salty Corporation.On January 1,2009,Salty issued $1,000,000 face amount of 12%,$1,000 bonds payable at 119.20.The bonds pay interest on January 1 and July 1 of each year and mature on January 1,2017.On July 2,2014,Popcorn purchased all of the outstanding bonds at a price of $107.50.Both companies use straight-line amortization.
Required:
1.Prepare the journal entries for July 1,2014 through December 31,2014 for Popcorn Corporation.
2.Prepare the journal entries for July 1,2014 through December 31,2014 for Salty Corporation.
3.Prepare the elimination entries necessary on the consolidating working papers for the year ended December 31,2014.

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Definitions:

Good

A tangible product or item that satisfies some human desire or need, often available for sale in the market.

Tax Revenue

Government income collected from citizens and businesses through imposed levies and duties.

Tax

A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Good

An item or service that fulfills a consumer's want or need, which can be tangible, like a car, or intangible, like a service provided by a dentist.