In: Accounting
*SOLVE USING THE STRAIGHT-LINE METHOD*
Universal Foods issued 12% bonds, dated January 1, with a face
amount of $175 million on January 1, 2021 to Wang Communications.
The bonds mature on December 31, 2035 (15 years). The market rate
of interest for similar issues was 14%. Interest is paid
semiannually on June 30 and 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. to 3. Prepare the journal entries to record the
purchase of the bonds by Wang Communications on January 1, 2021,
interest revenue on June 30, 2021 and interest revenue on December
31, 2028. (Round final answers to the nearest whole
dollars. If no entry is required for a transaction/event, select
"No journal entry required" in the first account
field.)
1. Record the investment in bonds on January 1, 2021.
2. Record the interest on June 30, 2021.
3. Record the interest on December 31, 2028.