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I have the majority of the problem done but I'm struggling with the last two requirements of recording subsequent events. On February 1, 2021. Cromley
I have the majority of the problem done but I'm struggling with the last two requirements of recording subsequent events.
On February 1, 2021. Cromley Motor Products issued 8% bonds, dated February 1, with a face amount of $90 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 $90,000 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: 1. Determine the price of the bonds issued on February 1, 2021. 2-a. Prepare amortization schedules that indicate Cromley's effective interest expense for each interest period during the term to maturity. 2-b. Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. 3. Prepare the journal entries to record the issuance of the bonds by Cromley and 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Req3 Req 4 Cromley Req 4 Barnwell Determine the price of the bonds issued on February 1, 2021. (Do not round intermediate calculations. Enter your answer in whole dollars.) OS Price of the bonds $ 84,183,156 Req 2A > Prepare amortization schedules that indicate Cromley's effective interest expense for each interest period during the term to maturity. (Do not round intermediate calculations. Enter your answers in whole dollars.) Payment Nurnber a sh Payment Cash Payment Effective Interest Increase in Balance $ $ $ 1 3,600,000 3,600,000 3,600,000 3,600,000 3.600.000 3,600,000 3,600,000 3,600,000 28,800,000 4 Outstanding Balance 84. 183,156 84.792,314 8 5,431,930 86,103,526 86.808,702 8 7,549,137 88,326,594 89,142,924 90,000,070 4,209,158 4.239.616 4,271,596 ,305,176 4,340,435 4.377,457 4,416,330 4,457,146 34,616,914 609,158 639.616 671,596 705,176 740,435 777,457 816,330 857,146 5,816,914 Totals $ $ $ Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period di maturity. (Do not round intermediate calculations. Enter your answers in whole dollars.) Payment Number Cash Payment Effective Interest Increase in Balance $ 1 2. 3 609 640 672 3,600 3,600 3,600 3.600 3,600 3,600 3,600 3,600 28.800 705 Outstanding A Balance 184 183 84.792 85.431 86,103 86,808 87,548 88,325 89,141 89.998 4,209 4.240 4.272 4,305 4.340 4.377 4.416 4.457 34,616 1740 7 77 11816 8 1857 Totals $ $ Reg 2A Reg 3 > Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on February 1 no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not roun intermediate calculations. Enter your answers in whole dollars.) Credit Date General Journal February 01, 2021 Cash Discount on bonds payable Bonds payable Debit 84,183,156 5,816,844 90,000,000 2 90,000 February 01, 2021 Investment in bonds Cash Discount on bond investment 84,183 5,817 Prepare the journal entries by Cromley to record all subsequent events related to the bonds through January 31, 2023. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round intermediate calculations. Enter your answers in whole dollars.) Credit No 1 Date July 31, 2021 Debit 4,209,158 General Journal Interest expense Discount on bonds payable Cash 609,158 3,600,000 December 31, 202 Interest expense Discount on bonds payable Interest payable 3,000,000 3 3,000,000 January 31, 2022 Interest expense Interest payable Discount on bonds payable Cash 3,600,000 July 31, 2022 Interest expense Discount on bonds payable Cash oOOOOO 3,600,000 15 December 31, 202 Interest expense Discount on bonds payable Interest payable 3,000,000 3.000.000 January 31, 2023 Interest expense Interest payable Discount on bonds payable Cash 3,600,000 No Date July 31, 2021 Credit General Journal Cash Discount on investment in bonds Interest revenue Debit 3,600 609 4,209 2 December 31, 202 Interest receivable Discount on investment in bonds Interest revenue 3 January 31, 2022 Cash Discount on investment in bonds Interest revenue Interest receivable July 31, 2022 Cash Discount on investment in bonds Interest revenue December 31, 202 Interest receivable Discount on investment in bonds Interest revenue January 31, 2023 Cash Discount on investment in bonds Interest revenue Interest receivableStep by Step Solution
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