Plug Corporation purchased $100,000 par value bonds of its subsidiary, Spark Company, on December 31, 20X5, from Lemon Corporation for $102,800. The 10-year bonds bear a 9 percent coupon rate, and Spark originally sold them on January 1, 20X3, to Lemon at 95. Interest is paid annually on December 31. Plug owns 85 percent of the stock of Spark.
In preparing the consolidation worksheet at December 31, 20X6, Plug’s controller made the following entry to eliminate the effects of the intercorporate bond ownership:

Bonds Payable 100,000
Interest Income 8,600
Retained Earnings, January 1 5,355
Noncontrolling Interest 945
Investment in Spark Company Bonds 102,400
Discount on Bonds Payable 3,000
Interest Expense 9,500

Required:
(a) What amount did Plug pay when it purchased Spark’s bonds?
(b) Prepare the journal entry made by Spark in 20X6 to record its interest expense for the year.
(c) Prepare the journal entry made by Plug in 20X6 to record its interest income on the Broadway bonds that it holds.
(d) Prepare the eliminating entry to remove the effects of the intercorporate bond ownership in completing a three-part consolidation worksheet at December 31, 20X5.

P8-4b dropping unfavorable division based on the following analysis of last year's operations of groves, inc., a financial vice president of the company believes that the firm's total net income could be increased by $160,000 if its design division were discontinued. (amounts are given in the thousands of dollars.) required provide answers for each of the following independent situations: a. assuming that total fixed costs and expenses would not be affected by discontinuing the design division, prepare an analysis showing why you agree or disagree with the vice president. b. assume that the discontinuance of the design division will enable the company to avoid 30% of the fixed portion of cost of services and 40% of the fixed operating expenses allocated to the design division. calculate the resulting effect on net income. c. assume that in addition to the cost avoidance in requirement (b), the capacity released by discontinuance of the design division can be used to provide 6,000 new services that would have a variable cost per service of $60 and would require additional fixed costs totaling $68,000. at what unit price must the new service be sold if groves is to increase its total net income by $180,000?