The following bond transactions occurred during 2021 for the University of Higher Learning (UHL) and Sweetwater Ltd.:

Feb.1UHL issued $10.2 million five-year, 4% bonds at 97 (this means 97% of face value) at a price to yield a market interest rate of 4.7%. The bonds pay interest semi-annually on August 1 and February 1.1Sweetwater Ltd. purchased $3.1 million of UHL's bonds at 97 as a long-term investment to be held to maturity.Aug.1UHL paid the semi-annual interest on the bonds.

(A) Prepare all required journal entries for Sweetwater Ltd., the investor, to record the above transactions.

(B) How would the journal entries for Sweetwater Ltd. change if it purchased the investment for trading purposes?

The following bond transactions occurred during 2021 for the University of Higher Learning (UHL) and Sweetwater Ltd.: Feb. 1 UHL issued $10.2 million five-year, 4% bonds at 97 (this means 97% of face value) at a price to yield a market interest rate of 4.7%. The bonds pay interest semi-annually on August 1 and February 1. Sweetwater Ltd. purchased $3.1 million of UHL's bonds at 97 as a long-term investment to be held to maturity. Aug. 1 UHL paid the semi-annual interest on the bonds. (a) Your Answer Correct Answer (Used) Prepare all required journal entries for Sweetwater Ltd., the investor, to record the above transactions. (List all debit entries before credit entries. 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 0 for the amounts. Round answers to O decimal places, e-g. 5,275.) Date Account Titles and Explanation Debit Credit Feb. 1 Long-Term Investments 3,007,000 Cash 3,007,000 Aug. 1 Cash 62,000 Long-Term Investments 8,665 Interest Income 70,665(b) How would the journal entries for Sweetwater Ltd. change if it purchased the investment for trading purposes? (List all debit entries before credit entries. 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 O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Feb. 1 V Aug. 1 eTextbook and Media List of Accounts