On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021, with face amount of $37 million. The bonds sold for $36.3 million and mature on February 28, 2024. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $37,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31, and both firms use the straight-line method. Required: 1. Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth's investment on April 1, 2021. 2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity.
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- On November 1, 2021, Sneezy Ltd. issued $10 million in 4 year, 8% debenture bonds, Interest is payable semi-annually on May 1 and November 1. When the bonds were issued, yields in the bond market were 8.5%. The company policy is to amortize bond premiums and discounts on a straight line basis. Sneezy Ltd. has a January 31 year end. Required: 1. Prepare all journal entries to record transactions related to the bond from November 1, 2021 to November 1, 2022, in Sneezy Ltd.'s financial records. 2. Clearly show how this financial information, related to the bond, will be reflected on the Statement of Financial Position and in the Income Statement of Sneezy Ltd. at the fiscal year end.On January 1, 2021, Rapid Airlines issued $200 million of its 8% bonds for $184 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $188 million as determined by their market value in the over-the-counter market. Rapid determined that $1,000,000 of the increase in fair value was due to a decline in general interest rates.Required:1. Prepare the journal entry to record interest on June 30, 2021 (the first interest payment).2. Prepare the journal entry to record interest on December 31, 2021 (the second interest payment).3. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2021,balance sheet.On January 1, 2020, National Retail purchased $100,000 of GEH Company bonds at a discount of $10,000. The GEH bonds pay 6% interest but were purchased when the market interest rate was 8% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. National Retail accounts for the bonds as a held-to-maturity investment and uses the effective interest method. In National Retail's December 31, 2020, journal entry to record the second period of interest would include a credit to interest revenue of: $3,000 $3,600 $3,336 d. $7,336 e. $3,624 a. b. C.
- On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021, with face amount of $47 million. The bonds sold for $46.3 million and mature on February 28, 2024. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $47,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31, and both firms use the straight-line method. 26 Required: 1. Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth's investment on April 1, 2021. 2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity. Complete this question by entering your answers in the tabs below. Reg 2 Stillworth Req 1 Req 2 Western Prepare the journal entries for Western Communications, Inc., to record all subsequent events related to the bonds through maturity. (If no entry is required for a transaction/event, select "No journal entry required" in…On January 1, 2021, Rapid Airlines issued $225 million of its 8% bonds for $207 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $213 million as determined by their market value in the over-the-counter market. Rapid determined that $1,000,000 of the increase in fair value was due to a decline in general interest rates. Required: 1. to 3. Prepare the journal entries to record interest on June 30, 2021 (the first interest payment), on December 31, 2021 (the second interest payment) and to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)Cotton Candy Company purchased $1,500,000 of 10% bonds of Caramel Company on January 1, 2024, paying $1,410,375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. For the year ended December 31, 2024, Cotton Candy Companys income statement will report interest revenue from the Caramel Company bonds of
- On January 1, 2021, Rupar Retailers purchased $130,000 of Anand Company bonds at a discount of $9,000. The Anand bonds pay 6% interest but were purchased when the market interest rate was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective interest method. In Rupar's December 31, 2021, journal entry to record the second period of interest, Rupar would record a credit to interest revenue of: Multiple Choice $4,235. $4,247. $4,550. $3,900.On February 1, 2021, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million. The bonds mature on January 31, 2025 (4 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $80,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31.Required:1. Determine the price of the bonds issued on February 1, 2021.2. Prepare amortization schedules that indicate (a) Cromley’s effective interest expense and (b) Barnwell’s effective interest revenue for each interest period during the term to maturity.3. Prepare the journal entries to record (a) the issuance of the bonds by Cromley and (b) Barnwell’s investment on February 1, 2021.4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2023.On March 1, 2024, Baddour, Incorporated, issued 10% bonds, dated January 1, with a face amount of $160 million. • The bonds were priced at $143.50 million (plus accrued Interest) to yield 12%. • The price if Issued on January 1 would have been $140.75 million. Interest is paid semiannually on June 30 and December 31. • Baddour's fiscal year ends September 30. Required: 1. to 3. What would be the amount(s) related to the bonds Baddour would report in its balance sheet, Income statement and statement of cash flows for the year ended September 30, 2024? Note: Enter your answers in whole dollars. Negative amounts should be indicated by a minus sign. Balance sheet: Bonds payable (net) Cash Income statement: Interest expense Statement of cash flows: Financing activities Operating activities
- The following transactions relate to bond investments of Livermore Laboratories. The company's fiscal year ends on December 31. Livermore uses the straight-line method to determine interest. 2024 July 1 Purchased $23 million of Bracecourt Corporation 12% debentures, due in 20 years (June 30, 2044), for $22.7 million. Interest is payable on January 1 and July 1 of each year. October 1 Purchased $37 million of 15% Framm Pharmaceuticals debentures, due May 31, 2034, for $38,972,000 plus accrued interest. Interest is payable on June 1 and December 1 of each year. December 1 Received interest on the Framm bonds. December 31 Accrued interest. 2025 January 1 Received interest on the Bracecourt bonds. June 1 Received interest on the Framm bonds. July 1 Received interest on the Bracecourt bonds. September 1 Sold $18.5 million of the Framm bonds at 103 plus accrued interest. December 1 Received interest on the remaining Framm bonds. December 31 Accrued interest. 2026 January 1 Received interest…On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. 1. S&R issued 6% stated rate bonds with a face amount of $110 million. The bonds mature on December 31, 2044 (20 years). The market rate of interest for similar bond issues was 7% (3.5% semiannual rate). Interest is paid semiannually (3.0%) on June 30 and December 31, beginning on June 30, 2025. 2. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $370,000 beginning on January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of $390,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that an 8% interest rate properly…Flounder Corp. purchased $276,000 of five-year, 7% Hydrocor bonds at 99 on June 30, 2024. Flounder Corp. purchased the bonds to earn interest. Interest is paid semi-annually each June 30 and December 31. The semi-annual amortization amount for the first interest period is $234 determined using the effective-interest method. At December 31, 2024, the bonds were trading at 98. Prepare the required journal entries on June 30 and December 31, 2024. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles (To record receipt of interest.) > (To record fair value adjustment.) Debit Credit