On February 1, 2024, Sanyal Motor Products issued 8% bonds, dated February 1, with a face amount of $90 million. • The bonds mature on January 31, 2028 (four 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 $90,000 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 31, 2026. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Req 1 Req 2A Price of the bonds Req 2B Req 3 Req 4 Sanyal Req 4 Barnwell Determine the price of the bonds issued on February 1, 2024. Note: Do not round intermediate calculations. Enter your answer in whole dollars.
On February 1, 2024, Sanyal Motor Products issued 8% bonds, dated February 1, with a face amount of $90 million. • The bonds mature on January 31, 2028 (four 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 $90,000 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 31, 2026. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Req 1 Req 2A Price of the bonds Req 2B Req 3 Req 4 Sanyal Req 4 Barnwell Determine the price of the bonds issued on February 1, 2024. Note: Do not round intermediate calculations. Enter your answer in whole dollars.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On February 1, 2024, Sanyal Motor Products issued 8% bonds, dated February 1, with a face amount of $90 million.
• The bonds mature on January 31, 2028 (four 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 $90,000 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 31, 2026.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Price of the bonds
Req 2B
Req 3
Req 4 Sanyal Req 4 Barnwell
Determine the price of the bonds issued on February 1, 2024.
Note: Do not round intermediate calculations. Enter your answer in whole dollars.
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