Problem 14-5 (Algo) Issuer and investor; effective interest; amortization schedule; adjusting entries [LO14-2] On February 1, 2021, Cromley Motor Products issued 12% bonds, dated February 1, with a face amount of $85 million. The bonds mature on January 31,2025 (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, 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. Complete this question by entering your answers in the tabs below. Determine the price of the bonds issued on February 1, 2021. (Do not cound intermediate calcuiations. Enter your answer in whole dollars.) 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.) Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during maturity. (Do not round intermediate calculations. Enter your answers in whole dollars.) Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on February 1 , 2021. (If no entr 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.) Record the issuance of the bonds by Cromley. 2 Record the Bond investment by 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.) 1 Record the payment of interest for Cromley Company. 2 Record the accrued interest for Cromley Company. 3 Record the payment of interest for Cromley Company. 4 Record the payment of interest for Cromley Company. 5 Record the accrued interest for Cromley Company. 6 Record the payment of interest for Cromley Company. Note : O= journal entry has been entered Prepare the journal entries by Barnwell to record all subsequent events related to the bonds through January 31 , 2023. (If no required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calcul. Enter your answers in whole dollars.) 1 Record the receipt of interest for Barnwell Company. 2 Record the accrued interest for Barnwell Company. 3. Record the receipt of interest for Barnwell Company. 4 Record the receipt of interest for Barnwell Company. 5 Record the accrued interest for Barnwell Company. 5 Record the receipt of interest for Barnwell Company
