Prepare the journal entries to record issuance of the bonds

Assignment Help Accounting Basics

Reference no: EM132216924

Question - On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face amount of $45 million. The bonds sold for $44.3 million and mature on February 28, 2021. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $45,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31, and both firms use the straight-line method.

Required:

1. Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth's investment on April 1, 2018.

2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity.

Journal Entry Worksheet -

Requirement 1

A. Record the issuance of the bonds by Western Communications on April 1 2018. (debits/credits)

B. Record the bond investment by Stillworth Corporation on April 1, 2018. (debits/credits)

Requirement 2

A. Record interest expense for Western Communications on August 31, 2018. (Debits/Credits)

B. Record interest expense for Western Communications on December 31, 2018. (Dr/Cr)

C. Record interest expense for Western Communications on Feb 28, 2019. (Dr/Cr)

D. Record interest expense for Western Communications on Aug 31, 2019. (Dr/Cr)

E. Record interest expense for Western Communications on Dec 31, 2019. (Dr/Cr)

F. Record interest expense for Western Communications on Feb 28, 2020. (Dr/Cr)

G. Record interest expense for Western Communications on Aug 31, 2020. (Dr/Cr)

H. Record interest expense for Western Communications on Dec 31, 2020. (Dr/Cr)

I. Record interest expense for Western Communications on Feb 28, 2021. (Dr/Cr)

J. Record the retirement of the bond by Western Communications on Feb 28, 2021. (Dr/Cr)

Requirement 3

A. Record interest revenue for Stillworth Corporation on Aug 31, 2018. (Dr/Cr)

B. Record interest revenue for Stillworth Corporatio on Dec 31, 2018. (Dr/Cr)

C. Record interest revenue for Stillworth Corporation on Feb 28, 2019. (Dr/Cr)

D. Record interest revenue for Stillworth Corporation on Aug 31, 2019. (Dr/Cr)

E. Record interest revenue for Stillworth Corporation on Dec. 31, 2019. (Dr/Cr)

F. Record interest revenue for Stillworth Corporation on Feb. 28, 2020. (Dr/Cr)

G. Record interest revenue for Stillworth Corporation on Aug 31, 2020. (Dr/Cr)

H. Record interest revenue for Stillworth Corporation on Dec 31, 2020. (Dr/Cr)

I. Record interest revenue for Stillworth Corporation on Feb 28, 2021. (Dr/Cr)

J. Record the receipt of the bond retirement proceeds by Stillworth Corporation on Feb 28, 2021. (Dr/Cr).

Reference no: EM132216924

Questions Cloud

Who process metal ores engaged : Which kind of production are steel workers who process metal ores engaged in and why? Discuss.

Three diversification paths-related businesses : Three diversification paths: related businesses, unrelated businesses, and a mix of both. Select a company that has chosen one of these options.

Describe a possible research project : What type of research method do you think you would prefer to use, say, in a senior thesis as a social science major? Why? Describe a possible research project

Discussion about the breast cancer : In previous weeks we have been reviewing the prevalence, mortality and morbidity associated with breast cancer. This is a topic of extreme public and personal.

Prepare the journal entries to record issuance of the bonds : Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth's investment on April 1, 2018

Minimize the effects of divorce on families : What are some evidence-based strategies that help minimize the effects of divorce on families?

Parenting that impacts child development of self-worth : Which of the following is not described by Wright as a key factor in parenting that impacts a child’s development of self-worth?

Stop the outbreak of diseases : Is the United States of America accountable for assisting other countries stop the outbreak of diseases. Why or why not?

How have they caused this erosion : What factors are these and how have they caused this erosion? Explain.

User Account

All Pages