On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face amount of$30 million. The bonds sold for $29.3 million and mature on February 28, 2021. Interest is paid semiannuallyon August 31 and February 28. Stillworth Corporation acquired $30,000 of the bonds as a long-term investment.The fiscal years of both firms end December 31, and both firms use the straight-line method.Required:1. Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth’s investment onApril 1, 2018.2. Prepare the journal entries by both firms to record all subsequent events related to the bonds throughmaturity.
On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face amount of$30 million. The bonds sold for $29.3 million and mature on February 28, 2021. Interest is paid semiannuallyon August 31 and February 28. Stillworth Corporation acquired $30,000 of the bonds as a long-term investment.The fiscal years of both firms end December 31, and both firms use the straight-line method.Required:1. Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth’s investment onApril 1, 2018.2. Prepare the journal entries by both firms to record all subsequent events related to the bonds throughmaturity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face amount of
$30 million. The bonds sold for $29.3 million and mature on February 28, 2021. Interest is paid semiannually
on August 31 and February 28. Stillworth Corporation acquired $30,000 of the bonds as a long-term investment.
The fiscal years of both firms end December 31, and both firms use the straight-line method.
Required:
1. Prepare the
April 1, 2018.
2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through
maturity.
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