Indirect intercompany debt transaction

1 : What are the journal entries for an indirect intercompany debt transaction where Company A has a note payable and accrued interest payable to XYZ, an unrelated party, 

2 : And B Company, a company affiliated with A Company, has acquired the debt via a note payable to XYZ for the total of the principal and accrued interest owed by Company A?

Answer :

1 :

I guess; Cash XXXX

N/P XXXXX

Interest Exp. XXXX

Interest payable XXXX

2 : When a note or bond payable is sold directly to an affiliate at par value, the entries recorded by the investor and the issuer should be mirrorimages of each other.

Bonds Payable $XXXX

Investment in Bonds $XXXX

To eliminate intercorporate bond holding

Interest Income $XXXX

Interest Expense $XXXX

To eliminate intercompany interest – income

Interest Payable $XXXXX

Interest Receivable $XXXXX

To eliminate intercompany interest 

I guess you may contact a biookkeeper for the corp for more acuarate info in detail.

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