To Eliminate Intercompany Bonds and Interest Expense of Consolidated Companies

Multiple Choice

To eliminate intercompany bonds and interest expense of consolidated companies, Company P (Parent) and Company S (Subsidiary) which of the following is correct?

A) ​Debit Interest Expense and credit Interest Income and credit Bonds Payable and debit Investment in Company S
B) ​Credit Interest Expense and debit Interest Income and credit Bonds Payable and debit Investment in Company S
C) ​Debit Interest Income and credit Interest Expense and debit any related Loss on Bond Retirement, if any, and debit Bonds Payable and credit Investment in Company S Bonds
D) ​Debit Subsidiary Income and credit Investment in Company S Stock