On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face amount of $45 million. The bonds sold for $44.3 million and mature on February 28, 2021. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $45,000 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) Stillworths investment on April 1, 2018. 2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity.

Journal Entry Worksheet

Requirement 1

A. Record the issuance of the bonds by Western Communications on April 1 2018. (debits/credits)

B. Record the bond investment by Stillworth Corporation on April 1, 2018. (debits/credits)

Requirement 2

A. Record interest expense for Western Communications on August 31, 2018. (Debits/Credits)

B. Record interest expense for Western Communications on December 31, 2018. (Dr/Cr)

C. Record interest expense for Western Communications on Feb 28, 2019. (Dr/Cr)

D. Record interest expense for Western Communications on Aug 31, 2019. (Dr/Cr)

E. Record interest expense for Western Communications on Dec 31, 2019. (Dr/Cr)

F. Record interest expense for Western Communications on Feb 28, 2020. (Dr/Cr)

G. Record interest expense for Western Communications on Aug 31, 2020. (Dr/Cr)

H. Record interest expense for Western Communications on Dec 31, 2020. (Dr/Cr)

I. Record interest expense for Western Communications on Feb 28, 2021. (Dr/Cr)

J. Record the retirement of the bond by Western Communications on Feb 28, 2021. (Dr/Cr)

Requirement 3

A. Record interest revenue for Stillworth Corporation on Aug 31, 2018. (Dr/Cr)

B. Record interest revenue for Stillworth Corporatio on Dec 31, 2018. (Dr/Cr)

C. Record interest revenue for Stillworth Corporation on Feb 28, 2019. (Dr/Cr)

D. Record interest revenue for Stillworth Corporation on Aug 31, 2019. (Dr/Cr)

E. Record interest revenue for Stillworth Corporation on Dec. 31, 2019. (Dr/Cr)

F. Record interest revenue for Stillworth Corporation on Feb. 28, 2020. (Dr/Cr)

G. Record interest revenue for Stillworth Corporation on Aug 31, 2020. (Dr/Cr)

H. Record interest revenue for Stillworth Corporation on Dec 31, 2020. (Dr/Cr)

I. Record interest revenue for Stillworth Corporation on Feb 28, 2021. (Dr/Cr)

J. Record the receipt of the bond retirement proceeds by Stillworth Corporation on Feb 28, 2021. (Dr/Cr)