Question 1

On February 1, 2013, Cromley Motor Products issued 10% bonds, dated February 1, with a face amount of $60 million. The bonds mature on January 31, 2017 (4 years). The market yield for bonds of similar risk and maturity was 12%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $60,000 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 $1andPVAD of $1)(Use appropriate factor(s) from the tables provided.)

Required:
1.	Determine the price of the bonds issued on February 1, 2013.(Enter your answers in whole dollars.)

2.1	Prepare amortization schedules that indicate Cromleys effective interest expense for each interest period during the term to maturity.(Enter your answers in whole dollars.)

2.2	Prepare amortization schedules that indicate Barnwells effective interest revenue for each interest period during the term to maturity.(Enter your answers in whole dollars.)

3.	Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwells investment on February 1, 2013.(Enter your answers in whole dollars. If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

4.	Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2015.(Enter your answers in whole dollars. If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Cromley Motor Products Barnwell Industries

Question 2)

The Bradford Company issued 10% bonds, dated January 1, with a face amount of $80 million on January 1, 2013. The bonds mature on December 31, 2022 (10 years). For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. (FV of $1,PV of $1,FVA of $1,PVA of $1,FVAD of $1andPVAD of $1)(Use appropriatefactor(s) from the tables provided.)

Required:

1.

Determine the price of the bonds at January 1, 2013.(Enter your answers whole dollars.)

Table values are based on:
n =
i =
Cash Flow	Amount	Present Value
Interest
Principal
Price of bonds

2.

Prepare the journal entry to record their issuance by The Bradford Company on January 1, 2013.(Enter your answers in whole dollars. If no journal entry is required for a transaction, select "No journal entry required" in the first account field.)

Journal Entry Worksheet

• Record the bond issuance by the Bradford Company.

Date

General Journal

Debit

Credit

3.	Prepare the journal entry to record interest on June 30, 2013 (at the effective rate).(Enter your answers in whole dollars. If no journal entry is required for a transaction, select "No journal entry required" in the first account field.)

4.	Prepare the journal entry to record interest on December 31, 2013 (at the effective rate).(Enter your answers in whole dollars. If no journal entry is required for a transaction, select "No journal entry required" in the first account field.)