McWherter Instruments sold $650 million of 8% bonds, dated January 1, on January 1, 2018. The...

McWherter Instruments sold $650 million of 8% bonds, dated January 1, on January 1, 2018. The bonds mature on December 31, 2037 (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 $650,000 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, 2018.
2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2018.
3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2018 (at the effective rate).
4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2018 (at the effective rate).

Solutions

Expert Solution

ekkarill92 answered 11 months ago

Next > < Previous

Related Solutions

McWherter Instruments sold $500 million of 8% bonds, dated January 1, on January 1, 2018. The...

McWherter Instruments sold $500 million of 8% bonds, dated January 1, on January 1, 2018. The bonds mature on December 31, 2037 (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 $500,000 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)...

McWherter Instruments sold $500 million of 8% bonds, dated January 1, on January 1, 2018. The...

McWherter Instruments sold $550 million of 10% bonds, dated January 1, on January 1, 2018. The...

McWherter Instruments sold $550 million of 10% bonds, dated January 1, on January 1, 2018. The bonds mature on December 31, 2037 (20 years). For bonds of similar risk and maturity, the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $550,000 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)...

McWherter Instruments sold $410 million of 10% bonds, dated January 1, on January 1, 2018. The...

McWherter Instruments sold $410 million of 10% bonds, dated January 1, on January 1, 2018. The bonds mature on December 31, 2037 (20 years). For bonds of similar risk and maturity, the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $410,000 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)...

McWherter Instruments sold $620 million of 10% bonds, dated January 1, on January 1, 2018. The...

McWherter Instruments sold $620 million of 10% bonds, dated January 1, on January 1, 2018. The bonds mature on December 31, 2037 (20 years). For bonds of similar risk and maturity, the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $620,000 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)...

McWherter Instruments sold $470 million of 10% bonds, dated January 1, on January 1, 2021. The...

McWherter Instruments sold $470 million of 10% 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 12%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $470,000 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)...

McWherter Instruments sold $350 million of 6% bonds, dated January 1, on January 1, 2021. The...

McWherter Instruments sold $350 million of 6% 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 8%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $350,000 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)...

Blackberry Corporation sold $2,500,000 of 10 year 8% bonds on January 1, 2018. The bonds were dated...

Blackberry Corporation sold $2,500,000 of 10 year 8% bonds on January 1, 2018. The bonds were dated January 1, 2018 and pay interest on July 1 and January 1. Blackberry uses the straight-line method to amortize and bond premium or discount. Blackberry’s year end is December 31. Instructions: a. Prepare all the necessary journal entries to record the issue of the bonds and bond interest expense for 2018, assuming: 1. that the bonds sold at 100 (face value) 2. that the bonds sold at 103 3. that...

On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...

On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face amount of $10 million. The bonds mature in 2022 (5 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. A. What was the issue price of the bonds? B. Prepare the journal entry to record the bond issuance. C. Prepare the journal entry to record interest on June 30, 2018,...

On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face...

On January 1, 2018, Entity A issued 8% bonds dated January 1, 2018, with a face amount of $10 million. The bonds mature in 2022 (5 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. A. Prepare a partial balance sheet showing the bonds at December 31, assuming that Entity A had used the effective interest method from the inception. B. Why might a company utilize...

Subjects