Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. Pluto Corporation owns 65% of Saturn's voting shares. On Jan 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star for $118,020. On the date Pluto purchased the bonds, the bonds' carrying value on Saturn's book was $126,019. The bonds pay 12 percent interest annually on December 31. The preparation of consolidated financial statements for Saturn and Pluto at December 31, 20X9, required the following consolidating entry: Bonds Payable120,000 Premium on Bonds Payable3,470 Interest Income14,705 Investment in Saturn Corporation Bonds 118,838Interest Expense 13,461Investment in Saturn Corporation Stock 3,819NCI in NA of Saturn
Corp. 2,057Based on the information given above, if 20X9 consolidated net income of $50,000 would have been reported without the consolidating entry provided, what amount will actually be reported?
A. $45,286
B. $47,774
C. $48,756
D. $51,244
Answer: C
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