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

question 29

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 receivable will be recorded by Puget Corporation on December 31,20X8,in its separate financial statements?

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

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Definitions:

Failure to Warn

A legal concept in product liability whereby a manufacturer is held liable for not providing adequate warning to consumers about the risks or hazards associated with using a product.

Exterminator

An exterminator is a professional who specializes in eliminating pests and vermin from properties.

Pesticides

Chemical substances used to kill or control pests in agriculture, landscaping, and public health applications.

Implied Warranty

A legal concept presuming that sold goods are fit for their intended purpose, even if not expressly stated by the seller.