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Prepare the journal entries to record issuance

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Question - McWherter Instruments sold $540 million of 10% bonds, dated January 1, on January 1, 2016. The bonds mature on December 31, 2035 (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 $540,000 of the bonds as a long-term investment.

Bond Price: 458,748,900

Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2016.

Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2016 (at the effective rate).

Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2016 (at the effective rate).

Reference no: EM132112950

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