Saturn Corporation issued $300,000 par value 10-year bonds at 107 on January 1, 20X3, which Star Corporation purchased. On July 1, 20X7, Pluto Corporation purchased $120,000 face value of Saturn bonds from Star. 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 consolidation entry: Bonds Payable 120,000 Premium on Bonds Payable 2,520 Interest Income 14,760 Investment in Saturn Corporation Bonds 118,920 Interest Expense 13,560 Investment in Saturn Corporation Stock 3,120 NCI in NA of Saturn Corp. 1,680 Based on the information given above, what amount did Pluto pay when it purchased the bonds on July 1,
20X7?
A. $118,620
B. $117,220
C. $118,920
D. $118,020
Answer: D
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