On February 1, 2021, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $75 million. The bonds mature on January 31, 2025 (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 $75,000 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 approprlate factor(s) from the tables provided.) Requlred: 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 Reg 2A Reg 28 Reg 3 Reg 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.) Price of the $ 69950,415 bonds Reg 1 Req 2A > Reg 1 Reg 2A Reg 28 Reg 3 Reg 4 Cromley Req 4 Barnwell 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 Number Cash Payment Effective Interest Increase in Balance Outstanding Balance 2.250,000 2,250,000 2,250,000 2.250,000 3,497,521 > > 174,876 X 3,559,682 X 559,662 71,752,892 X 3,587,845 X 587,645 X 3,680.272 X 87,400,175 S 507.630 X 533,011 X 1,309,662 (1.690.338) 71,752,892 3.587,645 587,645 680,272 X 77,268,419 69,950,415 70.458,045 % 70,991,056 72,300.718 70,610,380 142,363,272 145.950.917 146,538,562 7,485,714 X Totals $ 9,000,000 $ Reg 1 Reg 2A Reg 28 Reg 3 Reg 4 Cromley Reg 4 Barnwell Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. (Do not round intermediate calculations. Enter your answers in whole dollars.) Payment Number Cash Payment Effective Interest Increase in Balance s 1 3,000 XS ,000 X 3,000 3 Outstanding Balance 70.153 X 70,661 x 71,194 X 71,042 3,508 XS 3,533 X 2.848 508 X 533 X (152) 75,000 3,533 13,422 533 1422 Totals $ 9.000 $ Reg 1 Reg 2A Reg 28 Reg 3 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, 2021. (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.) No Date General Journal Credit 1 February 01, 2021 Cash Discount on bond investment Bonds payable Debit 69,950,415 5,049,585 $ 75,000,000 2 507,630 X February 01, 2021 Investment in bonds Bonds payable 507,630 X Reg 1 Reg 2A Reg 2B Reg 3 Reg 4 Cromley Reg 4 Barnwell 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.) No Date Credit 1 July 31, 2021 X General Journal Cash Discount on bond investment Bonds payable Debit 69,950,415 X 5.049,585 75.000.000 x 300,000 X December 31, 202 Interest expense Cash 300,000 X 507,630 X January 31, 2022 Interest expense Discount on bond investment 507,630 X OOO July 31, 2022 3,000,000 Interest expense Cash 3.000.000 X 533,000 December 31, 202 Interest expense Discount on bond investment 533,000 X 6 January 31, 2023 Interest expense 3,000,000 X Cash 3,000,000 X Reg 1 Reg 2A Req 2B Reg 3 Req 4 Cromley Req 4 Barnwell Prepare the journal entries by Barnwell 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.) General Journal Credit No 1 Date July 31, 2021 Debit 69.950.415 X X Investment in bonds Cash 69,950,415 X 3,000 X December 31, 202 Cash Interest revenue 3,000 X January 31, 2022 Investment in bonds Interest revenue 500 X July 31, 2022 3,000 X Cash Interest revenue 3,000 X December 31, 202 Investment in bonds Interest revenue 530 X 560 X January 31, 2023 Cash Interest revenue 580 X
