CHAPTER 14 (11.)

On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $40 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 8%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $55,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:

2-b. Prepare amortization schedules that indicate Barnwells effective interest revenue for each interest period during the term to maturity. 4. Prepare the journal entries by BARNWELL to record all subsequent events related to the bonds through January 31, 2020. BELOW ARE THE PICTURES OF THE ANSWERS I GOT WRONG

Credit No 1 Date July 31, 2018 General Journal Cash Discount on bond investment Interest revenue Debit 1,680 372 2,052 2 December 31, 201 Interest receivable Discount on bond investment Interest revenue 1,400 X 322 1,722 1,680 X 64 X January 31, 2019 Cash Discount on bond investment Interest receivable Interest revenue 1,400 X 344 July 31, 2019 Cash 1,680 X 402 Discount on bond investment Interest revenue 2,082 5 December 31, 201 Interest receivable Discount on bond investment Interest revenue 1,400 X 349 1,749 X 1,680 X 70 X January 31, 2020 Cash Discount on bond investment Interest receivable Interest revenue 1,400 350