Nama Kelompok:

1. 0312518109 – Dea Aulia Amanah

2. 0312518113 – Lilis Sundari

Tugas Direct and Indirect Purchase of Obligation

P8-14

a. Record the journal entry or entries for 20X2 on Porter’s books related to its investment in
Temple.
- Penerimaan Dividen
Cash 6.000
Investment in Temple Corp. Stock 6.000
(10.000 x 60%)
- Pengakuan Pendapatan
Investment in Temple Corp Stock 17.874
Income from Temple Corp 17.874
(29.790 x 60%)
b. Record the journal entry or entries for 20X2 on Porter’s books related to its bonds payable.
Interest Paid Interest Premium
No Date Carrying Value
(6%) Expense (7%) Amortization
01/01/20X1 83.280
1 31/12/20X1 6400 5.830 570 82.710
2 31/12/20X2 6400 5.790 610 82.100
3 31/12/20X3 6400 5.747 653 81.447
4 31/12/20X4 6400 5.701 699 80.748
5 31/12/20X5 6400 5.652 748 80.000

Interest Expense 5.790

Bonds Premium 610
Cash 6.400
c. Record the journal entry or entries for 20X2 on Temple’s books related to its investment in
Porter’s bonds
Cash 6.400
Interest Income 5.790
Investment in Porter Company Bonds 610
d. Prepare the elimination entries needed to complete a consolidated worksheet for 20X2.
E1 Income From Temple Corp. 17.874
Dividends Declared 6.000
Investment in Temple Corp. Stock 11.874
E2 Income to Noncontrolling Interest 11.916
Dividends Declared 4.000
Noncontrolling Interest 7.916
 E3 Common Stock – Temple Corporation 100.000
Retained Earning 49.830
Investment in Temple Corp. Stock 89.898
Noncontrolling Interest 59.932
89.898 = 101.772 – 11.874
59.932 = (100.000 + 49.830) x 40%

E4 Bonds Payable 80.000

Premium on Bonds Payable 2.100
Interest Income 5.790
Investment in Porter Company Bonds 82.100
Interest Expense 5.790

e. Prepare a three-part consolidated worksheet for 20X2.

 Porter Company and Subsidiary
Consolidation Worksheet
December 31, 20X2

Porter Temple Elimination Entries

Consolidated
Item Co. Corp. DR CR
Income Statement
Sales 200.000 114.000 314.000
Interest Income 5.790 E4 5.790 -
Less: Cost of Good Sold (99.800) (61.000) (160.800)
Less: Depreciation Expense (25.000) (15.000) (40.000)
Less: Interest Expense (5.790) (14.000) E4 5.790 (14.000)
Income from Temple Corp 17.874 E1 17.874 -
Consolidated Net Income 87.284 29.790 23.664 5.790 99.200
NCI in Net Income E2 11.916 (11.916)
Controlling Interest Net Income 87.284 29.790 35.580 5.790 87.284

Statement of Retained Earning

Beginning Balance 230.068 49.830 E3 49.830 230.068
Net Income 87.284 29.790 35.580 5.790 87.284
Less: Dividends Declared (40.000) (10.000) E1 6.000 (40.000)
E2 4.000
Ending Balance 277.352 69.620 85.410 15.790 277.352

Balance Sheet
Cash and Account Receivable 81.480 38.720 120.200
Inventory 120.000 65.000 185.000
Investment in Temple Corp. Stock 101.772 E1 11.874 89.898
E3 89.898 (89.898)
Investment in Porter Company Bonds 82.100 E4 82.100 -
Building and Equipment 500.000 300.000 800.000
Less: Accumulated Depreciation (175.000) (75.000) (250.000)
Total Assets 628.252 410.820 - 183.872 855.200
Accounts Payable 68.800 41.200 110.000
Bonds Payable 80.000 200.000 E4 80.000 200.000
Bond Premium 2.100 E4 2.100 -
Common Stock 200.000 100.000 E3 100.000 200.000
Retained Earnings 277.352 69.620 85.410 15.790 277.352
NCI in NA of Temple Corp. E2 7.916 67.848
E3 59.932
Total Liability & Equity 628.252 410.820 267.510 83.638 855.200
P8-22
a. Compute the gain or loss on bond retirement reported in the 20X4 consolidated income
statement.
Interest
Interest Paid Premium
No Date Expense Carrying Value
(10%) Amortization
(7,13469%)
01/01/20X1 120.000
1 31/12/20X1 10.000 8.562 1.438 118.562
2 31/12/20X2 10.000 8.459 1.541 117.021
3 31/12/20X3 10.000 8.349 1.651 115.370
4 31/12/20X4 10.000 8.231 1.769 113.601
5 31/12/20X5 10.000 8.105 1.895 111.706
6 31/12/20X6 10.000 7.970 2.030 109.676
7 31/12/20X7 10.000 7.825 2.175 107.501
8 31/12/20X8 10.000 7.670 2.330 105.171
9 31/12/20X9 10.000 7.504 2.496 102.674
10 31/12/20Y0 10.000 7.326 2.674 100.000

Balance at Date of Purchase (Jan 1, 20X4) 115.370

Proportion of bonds purchased by Mainstream 40%
Book Value of Bonds Purchased 46.148
Amount paid by Mainstream to purchase Bonds: (44.000)
Gain on Bond Retirement 2.148
*115.370 = Amortization schedule (table)

b. Prepare the elimination entry needed to remove the effects of the intercorporate bond ownership
in completing the consolidation worksheet for 20X5.

c. What balance should be reported as consolidated retained earnings on December 31, 20X5?