On February 1, 2018, Cromley Motor Products issued 12% bonds, dated February 1, with a face amount of $85 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 14%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $85,000 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, 2018. 2-a. Prepare amortization schedules that indicate Cromleys effective interest expense for each interest period during the term to maturity. 2-b. Prepare amortization schedules that indicate Barnwells 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 Barnwells investment on February 1, 2018. 4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020.

Req 1 Req 2A Req 2B Req 3 Req 4 Cromley Req 4 Barnwell Determine the price of the bonds issued on February 1, 2018. (Enter your answer in whole dollars.) Price of the bonds Req 3 Req 4 Cromley Req 4 Barnwell Req 1 Req 2A Req 2B Prepare amortization schedules that indicate Cromley's effective interest expense for each interest period during the term to maturity. (Enter your answers in whole dollars.) Outstanding Balance Payment Number Cash Payment Effective Interest Increase in Balance 4 6 7 Totals S 0 Req 1 Req 2A Req 3Req 4 Cromley Req 4 Barnwell Req 2B Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. (Enter your answers in whole dollars.) Cash Payment Number Payment Effective Interest Increase in Outstanding Balance Balance 2 3 4 6 7 TotalsS Req 1 Req 2A Req 4 Cromley Req 4 Barnwell Req 2B Req 3 Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on February 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 Record the issuance of the bonds by Cromley. Note: Enter debits before credits. Date Geeit Credit General Journal February 01, 2018 Req 1 Req 2A Req 2B Req 4 Cromley Req 4 Barnwell Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on February 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 Record the Bond investment by Barnwell. Note: Enter debits before credits. Date General Journal Debit Credit February 01, 2018 Req 1 Req 3Req 4 Cromley Req 4 Barnwel Req 2B Req 2A Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 6 Record the payment of interest for Cromley Company. Note: Enter debits before credits. General Journal Date Debit Credit July 31, 2018 Req 3 Req 4 Cromley Req 4 Barnwell Req 1 Req 2A Req 2B Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 6 4 Record the accrued interest for Cromley Company. Note: Enter debits before credits. Debit Date General Journal Credit December 31, 2018 Req 1 Req 3Req 4 Cromley Req 4 Barnwel Req 2A Req 2B Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 6 Record the payment of interest for Cromley Company Note: Enter debits before credits. Date General Journal Debit Credit January 31, 2019 Req 1 Req 2A Req 4 Cromley Req 4 Barnwell Req 2B Req 3 Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 Record the payment of interest for Cromley Company. Note: Enter debits before credits. Date General Journal Debit Credit July 31, 2019 Req 2A Req 2B Req 3 Req 4 Cromley Req 4 Barnwel Req 1 Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 6 Record the accrued interest for Cromley Company. Note: Enter debits before credits. General Journal Debit Credit December 31, 2019 Req 1 Req 2A Req 2B Req 3 Req 4 Cromley Req 4 Barnwell Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 Record the payment of interest for Cromley Company. Note: Enter debits before credits. Date General Journal Credit January 31, 2020 Req 1 Req 2A Req 2B Req 3 Req 4 Cromley Req 4 Barnwell Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 4 6 Record the receipt of interest for Barnwell Company. Note: Enter debits before credits. General Journal Debit Credit Date July 31, 2018 Req 2A Req 2B Req 1 Req 3 Req 4 Cromley Req 4 Barnwel Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet Record the accrued interest for Barnwell Company. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2018 Req 2A Req 1 Req 2B Req 3 Req 4 Cromley Req 4 Barnwel Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 6 Record the receipt of interest for Barnwell Company. Note: Enter debits before credits. Debit Credit Ditd General Journal January 31, 2019 Req 1 Req 2A Req 2B Req 4 Cromley Req 4 Barnwell Req 3 Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 Record the receipt of interest for Barnwell Company. Note: Enter debits before credits. Credit General Journal July 31, 2019 Req 1 Req 2A Req 2B Req 3 Req 4 Cromley Req 4 Barnwell Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 4 6 Record the accrued interest for Barnwell Company. Note: Enter debits before credits. Date Debit General Journal Credit December 31, 2019 Req 1 Req 2A Req 2B Req 3 Req 4 Cromley Req 4 Barnwell Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet 2 4 6 Record the receipt of interest for Barnwell Company. Note: Enter debits before credits. Date General Journal Debit Credit January 31, 2020