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:

Economic Agreements

Formal arrangements between parties, often nations or businesses, regarding the conduct of economic activity, including trade, investment, and regulation.

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing the residual asset value once liabilities have been subtracted.

Public Offering

The process of issuing new securities for sale to the public, usually done to raise capital for expansion or other business activities.

Mature Company

A company that has reached a stage in its life cycle where growth slows to the industry or economy's average, often characterized by a stable customer base and predictable financial returns.