None On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021,with face amount of $44 million. The bonds sold for $43.3 million and mature on February28, 2024. Interest is paid semiannually on August 31 and February 28. StillworthCorporation acquired $44,000 of the bonds as a long-term investment. The fiscal years ofboth 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 on April 1, 2021.2. Prepare the journal entries by both firms to record all subsequent events related to thebonds through maturity.

Question 1a) Issuance of the bonds by WesternExplanation:The journal entry to record the issuance of…

Answered: On April 1, 2021, Western…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1RE

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Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
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Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021, with face amount of $31 million. The bonds sold for $30.3 million and mature on February 28, 2024. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $31,000 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 on April 1, 2021.2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity. Journal entry worksheet Record the issuance of the bonds by Western Communications. (1enrty) Record the bond investment by Stillworth Corporation (1 entry) Record interest expense for Western Communications. ( 10 entries) Record interest revenue for Stillworth Corporation. (10 entries) Note: Enter debits…
On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021, with face amount of $47 million. The bonds sold for $46.3 million and mature on February 28, 2024. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $47,000 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. 26 Required: 1. Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth's investment on April 1, 2021. 2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity. Complete this question by entering your answers in the tabs below. Reg 2 Stillworth Req 1 Req 2 Western Prepare the journal entries for Western Communications, Inc., to record all subsequent events related to the bonds through maturity. (If no entry is required for a transaction/event, select "No journal entry required" in…
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On February 1, 2021, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million. The bonds mature on January 31, 2025 (4 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $80,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31.Required:1. Determine the price of the bonds issued on February 1, 2021.2. Prepare amortization schedules that indicate (a) Cromley’s effective interest expense and (b) Barnwell’s effective interest revenue for each interest period during the term to maturity.3. Prepare the journal entries to record (a) the issuance of the bonds by Cromley and (b) Barnwell’s investment on February 1, 2021.4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2023.
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