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Consolidating Financial Statements for Intercompany Bond Purchase

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Cartwright, Inc. has $1,000,000 of 10% bonds outstanding on December 31, 20X8. On January 1, 20X9, Adam Corp., an 80%-owned subsidiary of Cartwright, Inc., purchases a $250,000 part of Cartwright, Inc.'s outstanding bonds in the market for $245,000. Interest accrued by 12/31/X9 is $12,500.

Determine the eliminating entries necessary for the 20X9 consolidated financial statements.

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Solution Summary

The Consolidated Financial Statement reflects all of the expenses for the subsidiary and parent company. Examine an intercompany sale and purchase of a bond.

$2.19