Question
on february 1 2018 cromley motor products issued 9% bonds, dated february 1 with a face amount of $80 million. The bonds mature on january
on february 1 2018 cromley motor products issued 9% bonds, dated february 1 with a face amount of $80 million. The bonds mature on january 31, 2022 (4 years) the market yield for bonds of similar risk and maturity was 10%. interest is paid semi-annually on july 31 and january 31. barnwell industries acquired $80,000 of the bonds as a long-term investment. the fiscal years of both firms end december 31. required: 1- determine the price of bonds issued on february 1 2018. 2-prepare amortization schedules that indicate (a) cromleys effective interest expense, and (b) barnwells effective interest revenue for each interest period during the term to maturity. 3- prepare the journal entries to record (a) the issuance of the bonds by cromley and (b) 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. (use excell)
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