On February 1, 2024, Sanyal Motor Products issued 6% bonds, dated February 1, witha face amount of $85 million. The bonds mature on January 31, 2028 (four years). Themarket yield for bonds of similar risk and maturity was 8%. Interest is paidsemiannually on July 31 and January 31. Barnwell Industries acquired $85,000 of thebonds 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, 2024. 2-a.Prepare amortization schedules that indicate Sanyal's effective interest expense foreach interest period during the term to maturity. 2 - b. Prepare amortization schedulesthat indicate Barnwell's effective interest revenue for each interest period during theterm to maturity. 3. Prepare the journal entries to record the issuance of the bonds bySanyal and Barnwell's investment on February 1, 2024. 4. Prepare the journal entriesby both firms to record all events related to the bonds through January 31, 2026.

The objective of the question is to determine the price of the bonds issued by Sanyal Motor Products…

Answered: On February 1, 2024, Sanyal Motor…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021, with face amount of $48 million. The bonds sold for $47.3 million and mature on February 28, 2024. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $48,000 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.
Albee, Inc. issued $100,000 face value bonds payable on September 1, 2018 at a price of $92,278. The bonds carried a stated annual interest rate of 8%, payable semi-annually on September 1 and March 1 of each year. On September 1, 2018, the effective (market) rate of interest was 10%. On March 1, 2020, after recording interest and amortization, Albee called in 40% of the outstanding bonds, at a call price of 99. Albee, Inc. uses the effective interest method to account for the bonds. REQUIRED: A) B) Prepare an amortization table for the bonds, from September 1, 2018 through September 1, 2020. Prepare all of the journal entries that Albee, Inc. should record for the bonds, from September 1, 2018 through September 1, 2020.
On February 1, 2024, Sanyal Motor Products issued 6% bonds, dated February 1, with a face amount of $75 million. ⚫ The bonds mature on January 31, 2028 (four years). The market yield for bonds of similar risk and maturity was 8%. • Interest is paid semiannually on July 31 and January 31. Barnwell Industries acquired $75,000 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, 2024. 2-a. Prepare amortization schedules that indicate Sanyal's effective interest expense for each interest period during the term to maturity. 2-b. Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. 3. Prepare the journal entries to record the issuance of the bonds by Sanyal and Barnwell's investment on February 1, 2024. 4. Prepare the journal entries by both firms to record all events related to the bonds through January…
Ellis Company issues 6.5%, five-year bonds dated January 1, 2021, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments.
On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million. The bonds mature on January 31, 2022 (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. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds issued on February 1, 2018. 2-a. Prepare amortization schedules that indicate Cromley's effective interest expense for each interest period during the term to maturity. 2-b. Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to maturity. 3. Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on…
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On January 1, 2022, Aaron Incorporated issued $1,530,000 par value, 6%, 7-year bonds (i.e., there were 1,530 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. The issue price of the bonds based on a 12% market rate of interest is $1,103,360. Prepare the amortization table for the first 2 years, assuming Aaron uses the straight-line method. (Round each calculation to the nearest whole number and then use the rounded value for each subsequent calculation in the table.) Date January 1, 2022 July 1, 2022 January 1, 2023 July 1, 2023 January 1, 2024 Cash Interest Straight-Line Interest Discount/Premium Amortization Carrying Value
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Rangel Corporation issued $520,000 of 5%, 15-year bonds payable on March 31, 2022. The market interest rate at the date of issuance was 8%, and the bonds pay interest semiannually. Rangel Corporation's year-end is March 31. Read the requirements. 1. Using the PV function in Excel, calculate the issue price of the bonds. (Round your answer to the nearest whole dollar.) The issue price of the bonds is
McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2021. The bonds mature on December 31, 2040 (20 years). For bonds of similar risk and maturity, the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $400,000 of the bonds as a long-term investment. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds issued on January 1, 2021. 2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2021. 3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2021 (at the effective rate). 4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2021 (at the effective rate). Complete this question by entering your answers in the tabs below. Required…
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On January 1 of the current year, Barton Corporation issued 10%, 5-year bonds with a face value of $100,000. The bonds are sold for $95,000. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, 5 years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the current year ended December 31 is a. $11,500 b. $5,000 c. $500 d. $11,000

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