The following bond transactions occurred during 2018 for the University of Higher Learning (UHL) and Otutye Ltd.:

Question:

The following bond transactions occurred during 2018 for the University of Higher Learning (UHL) and Otutye Ltd.:
Feb. 1 UHL issued $10 million five-year, 4% bonds at 96 (this means 96% of value) at a price to yield a market interest rate of 4.9%. The bonds pay interest semi-annually on August 1 and February 1.
1 Otutye Ltd. purchased $3 million of UHL's bonds at 96 as a long-term investment that was to be held to 1 The semi-annual interest on the bonds was paid.
Instructions
(a) Prepare all required journal entries for Otutye Ltd., the investor, to record the above transactions.
(b) How would the journal entries for Otutye Ltd. change if the investment had been purchased for trading purposes?
(c) Prepare all required entries for UHL, the investee, to record the above transactions.
(d) Comment on the differences in recording that you observe between the investor and the investee.
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...