Question - Johnson Company issued $2,000,000 par value 10-year bonds at 104 on January 1, 20X5, which Salem Corporation purchased. The coupon rate on the bonds is 8 percent. Interest payments are made semiannually on July 1 and January 1. On January 1, 20X8, Johnson Company purchased $1,500,000 par value of the bonds from Salem for $1,290,000. Salem owns 85 percent of Johnson's voting shares.
a. Prepare the worksheet eliminating entry or entries needed to remove the effects of the inter corporate bond ownership in preparing consolidated financial statements at December 31, 20X8.
b. Prepare the worksheet eliminating entry or entries needed to remove the effects of the inter corporate bond ownership in preparing consolidated financial statements at December 31, 20X9.