Spice Company Issued $200,000 of 10 Percent First Mortgage Bonds

question 8

Multiple Choice

Spice Company issued $200,000 of 10 percent first mortgage bonds on January 1,20X4,at 105.The bonds mature in 10 years and pay interest semiannually on January 1 and July 1.Pumpkin Corporation purchased $140,000 of Spice's bonds from the original purchaser on December 31,20X8,for $125,000.Pumpkin owns 75 percent of Spice's voting common stock.
-Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the 20X8 consolidated financial statements?

• A)$3,500
• B)$2,800
• C)$5,000
• D)$2,500

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Definitions:

Homologous Chromosomes

Pairs of chromosomes in a diploid organism, one inherited from each parent, that have corresponding gene sequences and structures.

Crossing Over

A genetic process occurring during meiosis where homologous chromosomes exchange segments of genetic material to form recombinant chromosomes, contributing to genetic diversity.

Same Chromosome

Refers to genes or genetic markers located on the same chromosome and often inherited together.

Assortment

The process during meiosis where chromosomes are randomly distributed to the gametes, contributing to genetic diversity.