Question
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
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 the 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?
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Business Accounting
Authors: Jill Collis, Andrew Holt, Roger Hussey
3rd Edition
113752149X, 9781137521491
