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On January 1, 2021, Waterway Ltd. issued bonds with a maturity value of $5.65 million for $5,420,610, when the market rate of Interest was 8%.
On January 1, 2021, Waterway Ltd. issued bonds with a maturity value of $5.65 million for $5,420,610, when the market rate of Interest was 8%. The bonds have a contractual interest rate of 7% and mature on January 1, 2026. Interest on the bonds is payable semi-annually on July 1 and January 1 of each year. On January 1, 2021. Crane Company, a public company, purchased Waterway Ltd. bonds with a maturity value of $1.13 million to earn interest. On December 31, 2021, the bonds were trading at 99. Both companies' year end is December 31 Click here to view the factor table. Present Value of 1 Click here to view the factor table. Present Value of an Annuity of 1 (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What amount did Crane Company pay for Waterway Ltd's bonds? (Round answer to 0 decimal places, eg. 5,275) Crane Company paid $ --/2 Question Part Score / Prepare the journal entry for Crane Company investor) on January 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round answers to decimat places, eg. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 To record purchase of investment) Prepare a bond amortization schedule for Crane Company for the first four interest periods. (Round answers to decimal places, eg. 5,275.) Bond Discount Amortization Table Effective Interest Method-Semi-annual Interest Payments 7% Bonds Issued at market rate of 8% (B) (C) Interest Revenue Discount Amortization (A) Interest Received (D) Bond Amortized ( Date Jan 1, 2021 July 1 2021 $ $ $ Jan. 1. 2022 July 1. 2022 Jan. 1. 2023 Prepare the journal entries for Crane Company to record: (1) The receipt of interest on July 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry* for the account titles and enter O for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit July 1 V (To record collection of interest on bonds.) (2) The accrual of interest on December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 (To accrue interest revenue.) (3) The receipt of interest on January 1, 2022. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (3) The receipt of interest on January 1, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (Collection of interest receivable.) Question Part Score --/8 Show how the bonds and related income statement accounts would be presented in Crane Company's financial statements for the year ended December 31, 2021. (Round answers to decimal places, eg, 5,275.) CRANE COMPANY Balance Sheet (Partial)
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