Pan Corporation owns 65 percent of Sauce Corporation's voting shares. On January 1, 20X3, Pan Corporation sold $300,000 par value 7 percent bonds to Sauce when the market interest rate was 4 percent. The bonds mature in 15 years and pay interest semiannually on June 30 and December 31.Based on the information given above, in the preparation of the 20X3 consolidated financial statements, interest income will be:
A. debited for $15,982 in the consolidation entries.
B. credited for $21,000 in the consolidation entries.
C. debited for $21,000 in the consolidation entries.
D. credited for $15,982 in the consolidation entries.
Answer: A
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