Puget Corporation Owns 80 Percent of Sound Company's Voting Shares

question 23

Multiple Choice

Puget Corporation owns 80 percent of Sound Company's voting shares.On January 1,20X7,Sound sold bonds with a par value of $300,000 at 95.Puget purchased two thirds of the bonds;the remainder was sold to nonaffiliates.The bonds mature in ten years and pay an annual interest rate of 6 percent.Interest is paid semiannually on January 1 and July 1.
-Based on the information given above,what amount of interest expense should be reported in the 20X8 consolidated income statement?

• A)$6,000
• B)$6,500
• C)$5,000
• D)$10,000

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