Question

3.2

On April 1, 2021, Western Communications, Inc., issued 12% bonds, dated March 1, 2021, with face amount of $43 million. The bonds sold for $42.3 million and mature on February 28, 2024. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $43,000 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. 1. Prepare the journal entries to record(a) issuance of the bonds by Western and (b) Stillworth's investment on April 1, 2021. 2. Prepare the journal entries by both firms to record all subsequent events related to the bonds through maturity. ook Complete this question by entering your answers in the tabs below. Reg 2 Reg 1 Reg 2 Western Stillworth Prepare the journal entries for Stillworth Corporation to record all subsequent events related to the bonds through maturity. (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.) View transaction list Journal entry worksheet 5 6 7 9 10 > Record interest revenue for Stillworth Corporation Note: Enter debits before credits General Journal Debit Credit Date August 31, 2021 < Prev 3 of 3 !! Next > OCK Week 3 Discu...docx

Answer 1

1. Record interest revenue

Interst receivable A/c --Dr

to, Interest revenue A/c

(Being interst receivable from interst revenue)

According to golden rule all income and gains are credit, receiver debit and credit the giver.

Here interests receiveble like a debtors..

When he paid interest then pass the below journal entry:

Cash A/c --Dr

to, interest receivable A/c

(Being interest receivable received in cash)