Question
In: Accounting
On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $60 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 semi-annually on July 31 and January 31. Barnwell Industries acquired $60,000 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 41, PVA of $1, FVAD of $1, PVAD of $1) (Use appropriate factor(s) from tables provided.) Required: 1. Determine the price of the bonds issued 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 February 1, 2018. 4. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020.
Solutions
ekkarill92 answered 1 month agoRelated Solutions
On February 1, 2018 Cromley Motor Products issued 10% bonds, dated February 1, with a face...
On February 1, 2018 Cromley Motor Products issued 10% bonds,
dated February 1, with a face amount of $90 million. The bonds
mature on January 31, 2022 (4 years). The market yield for bonds of
similar risk and maturity was 12%. Interest is paid semiannually on
July 31 and January 31. Barnwell Industries acquired $90,000 of the
bonds as a long-term investment. The fiscal years of both firms end
December 31.use FVof 1$, PV of 1$ etc.)
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dated February 1, with a face amount of $65 million. The bonds
mature on January 31, 2022 (4 years). The market yield for bonds of
similar risk and maturity was 14%. Interest is paid semiannually on
July 31 and January 31. Barnwell Industries acquired $65,000 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,...
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mature on January 31, 2022 (4 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 $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,...
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dated February 1, with a face amount of $40 million. The bonds
mature on January 31, 2022 (4 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 $55,000 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,...
On February 1, 2018, Cromley Motor Products issued 8% bonds, dated February 1, with a face...
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dated February 1, with a face amount of $75 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 $75,000 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,...
On February 1, 2018, Cromley Motor Products issued 8% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 8% bonds,
dated February 1, with a face amount of $75 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 $75,000 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,...
On February 1, 2018, Cromley Motor Products issued 8% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 8% bonds,
dated February 1, with a face amount of $75 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 $75,000 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,...
On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 6% bonds,
dated February 1, with a face amount of $50 million. The bonds
mature on January 31, 2022 (4 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 $50,000 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,...
On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 6% bonds,
dated February 1, with a face amount of $55 million. The bonds
mature on January 31, 2022 (4 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 $55,000 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,...
On February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face...
On February 1, 2018, Cromley Motor Products issued 6% bonds,
dated February 1, with a face amount of $95 million. The bonds
mature on January 31, 2022 (4 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 $95,000 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,...
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