From what you are saying, I assume that you want binary logging on the slave.
I think the problem is related to something that has bitten me many times.
Add this to /etc/my.cnf in the slave:
[mysqld] log-slave-updates
Without this, data is updated from the relay logs, but the transaction is not written to the slave binary logs.
Adding this is crucial, especially if you plan on using a subordinate as a master someday.
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