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Problem 7-7 L05,7 Chase Corporation owns 60 percent of Moncton Corporation's...

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Accounting

Problem 7-7
L05,7
Chase Corporation owns 60 percent of Moncton Corporation's voting shares. On January 1, Year 2, Chase Corporation sold
$300,000 par value, 6 percent first mortgage bonds to Moncton for $312,000. The bonds mature in 10 years and pay interest annually
on January 1. The straight-line method is used when amortizing the premium on the bonds.
Required
(a) Prepare the journal entries for Year 2 for Moncton related to its ownership of Chase's bonds.
(b) Prepare the journal entries for Year 2 for Chase related to the bonds.
(c) What amounts should be reported on the Year 2 consolidated statements with respect to these bonds?
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