Homework Answers
Slinger company issued bonds of 100,000 at a premium of 200. Out of which PAT Inc. holds the bonds of value 99,000
Therefore the holding ratio of bonds by PAT in slinger is
99,000/100,200 = 98.80%
| Pat | Slinger | Debit | Credit | |
| Interest receivable | 8000 | 7904 | ||
| Investment in slinger bonds | 99000 | 99000 | ||
| Interest payable | (8000) | 7904 | ||
| Bonds payable | (100000) | 98802 | ||
| Premium on bonds payable | (200) | 197.6 | ||
| Interest income | (9000) | 7706.4 | ||
| Interest expense | 7800 | 7706.4 |
Notes:-
1. 98.80% of bonds is held by PAT, so only that portion is eliminated, rest bonds is held by outsiders.
Therefore, interest receivable, payable, income and expense is also eliminated in that ratio.
98.80% of interest expense 7800 will be eliminated.
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