14-7

2. Prepare the journal entries by both firms to record all subsequent brad events related to the bonds through maturity. 14-7 McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2016. The bonds mature on December 31, 2035 (20 years) For bonds of similar risk and maturity, the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $400,000 of the bonds as a long-term investment. Issuer and investor effective interest LO14-2 Required: 1. Determine the price of the bonds issued on January 1, 2016. 2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2016. 3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2016 (at the effective rate). 4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2016 (at the effective rate). The fiscal year ends December 31 for Lake Hamilton Development. To provide funding for its Moonlight Bay project, LHD issued 5% bonds with a P 14-8 Bonds; effective interest; partial period interest financial statement effects face amount of $500,000 on November 1, 2016. The bonds sold for $442,215, a price to yield the market rate of 6%. The bonds mature October 31, 2036 (20 years). Interest is paid semiannually on April 30 and October 31. LO14-2 Required: 1. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2016? 2. What amount(s) related to the bonds will LHD report in its balance sheet at December 31 20162