In: Accounting
Universal Foods issued 12% bonds, dated January 1, with a face
amount of $180 million on January 1, 2018 to Wang Communications.
The bonds mature on December 31, 2032 (15 years). The market rate
of interest for similar issues was 14%. Interest is paid
semiannually on June 30 and December 31. Universal uses the
straight-line method. Universal Foods sold the entire bond issue to
Wang Communications. (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:
1-3. Prepare the journal entry to record the
purchase of the bonds by Wang Communications on January 1, 2018,
interest revenue on June 30, 2018 and interest revenue on December
31, 2025. (Enter your answers in whole dollars. If no entry
is required for a transaction/event, select "No journal entry
required" in the first account field.)