Question

4. prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2018. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Enter your answers in whole dollars.)

1.July 21 Record the interest expense of Cromley company.

2. Dec 31 Record the interest expense of Cromley company.

3. Jan 31 Record the interest expense of Cromley company.

4. July 31 Record the interest expense of Cromley company.

5. Dec 31 Record the interest expense of Cromley company.

6.Jan 31 2018 Record the interest expense of Cromley company.

On February 1, 2016, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $65 million. The bonds mature on January 31, 2020 (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 $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, EVA of $1, PWA 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 February 1, 2016. (Enter your answer in whole dollars.) Price of the bonds 2.1 Prepare amortization schedules that indicate Cromley’s effective interest expense for each interest period during the term to maturity. (Enter your answers in whole dollars.) Payment Outstanding Cash Payment Effective Interest Increase in Balance Number Balance Totals



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