Franklin Corporation Owns 90 Percent of the Outstanding Voting Stock

Multiple Choice

Franklin Corporation owns 90 percent of the outstanding voting stock of Georgia Company. On January 2, 2011, Georgia sold 7 percent bonds payable with a $5,000,000 face value maturing January 2, 2031 at a premium of $500,000. On January 1, 2013, Franklin acquired 20 percent of these same bonds on the open market at 97.66. Both companies use the straight-line method of amortization. What adjustment should be made to Franklin's 2014 beginning Retained Earnings as a result of this bond acquisition?

A) $107,100.
B) $113,400.
C) $119,700.
D) $144,000.
E) $152,000.