Intercompany note. Saratoga Company owns 80% of the outstanding common stock of Windsor Company. On May 1, 20X3, Windsor Company arranged a 1-year, $50,000 loan from Saratoga Company. The loan agreement speci?ed that interest would accrue at the rate of 6% per annum and that all interest would be paid on the maturity date of the loan.
The ?nancial reporting period ends on December 31, 20X3, and the note originating from the loan remains outstanding.
1. Prepare the entries that both companies would have made on their separate books, including the accrual of interest.
2. Prepare the eliminations, in entry form, that would be made on a consolidated worksheet prepared as of December 31, 20X3.