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On 1/1/2019, Allie Company issued bonds payable of $500,000 at 8%. It was sold at...

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Accounting

On 1/1/2019, Allie Company issued bonds payable of $500,000 at 8%. It was sold at $464,000 with effective interest rate of 9%. On 1/1/2020, Choco purchased all of Allies bond for $532,000 cash with effective interest at 7% and Allies bonds payable has been effectively retired.

1) What is Allies book value of $500,000 bonds payable on 1/1/2020? (6 points)

2) Prepare a journal entry that Choco will record on 1/1/2020 regarding purchase of Allies bond. (2 points)

3) Compute the consolidated gain or loss on a consolidated income statement for at the end of 2020. (4 points)

4) Prepare a journal entry that Allie will record for bond interest expense on 12/31/2020. (3 points)

PLEASE LABEL EACH ANSWER IN ORDER FROM 1-4

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