Connect MHE Reader A company issued 6%, 20-year bonds with a face an ACG it Prob

Question

Connect MHE Reader A company issued 6%, 20-year bonds with a face an ACG it Problems Saved ?? n February 1, 2018, Cromley Motor Products issued 6% bonds, dated February 1, with a face amount of $80 million. The bonds ature on January 31, 2022 4 years The market yield for bonds of similar risk and maturity was 8% interest is paid semiannually on ly 31 and January 31. Barnwell Industries acquired $80,000 of the bonds as a long-term investment. The fiscal years of both firms d December 31.(EV of S1. PV of S1. FVA of $1 PVA of $1, EVAD of $1 and PVAD of $1 (Use appropriate factorts) from the tables rovided.) equired: Determine the price of the bonds issued on February 1, 2018. a. Prepare amortization schedules that indicate Cromley's effective interest expense for each interest period during the term to aturity b. Prepare amortization schedules that indicate Barnwell's effective interest revenue for each interest period during the term to aturity. . Prepare the journal entries to record the issuance of the bonds by Cromley and Barnwell's investment on February 1, 2018. Prepare the journal entries by both firms to record all subsequent events related to the bonds through January 31, 2020. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3 Req 4 Cromley Reg 4 Barnwell Determine the price of the bonds issued on February 1, 2018. (Enter your answer in whole dollars.) Price of the bonds Req 2A ) K Prev 11 of 13Navt

Explanation / Answer

As per policy, only four parts of a question are allowed to answer at a time, so answering 4 parts:

1) Price of bond: 80m*3%*PVIFA(4%,8) + 80M * PVIF(4%,8) = 2.4M*6.733+80M*0.731= $74.6M 2a) amortisation schedules of Cromley Motor: period interest paid interest expense amortisation carrying value Feb 1 18 74.6 Jul 31 18 2.4 3.0 0.6 75.2 Jan 31 19 2.4 3.0 0.6 75.8 Jul 31 19 2.4 3.0 0.6 76.5 Jan 31 20 2.4 3.1 0.7 77.1 Jul 31 20 2.4 3.1 0.7 77.8 Jan 31 21 2.4 3.1 0.7 78.5 Jul 31 21 2.4 3.1 0.7 79.3 Jan 31 22 2.4 3.2 0.8 80.0 2b) amortisation schedules of Barnwell industries: period interest paid interest expense amortisation carrying value Feb 1 18 74600.0 Jul 31 18 2400 2984.0 584.0 75184.0 Jan 31 19 2400 3007.4 607.4 75791.4 Jul 31 19 2400 3031.7 631.7 76423.0 Jan 31 20 2400 3056.9 656.9 77079.9 Jul 31 20 2400 3083.2 683.2 77763.1 Jan 31 21 2400 3110.5 710.5 78473.7 Jul 31 21 2400 3138.9 738.9 79212.6 Jan 31 22 2400 3187.0 787.0 79999.6

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