Question

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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. Required: 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. Complete this question by entering your answers in the tabs below. Reg 2 Req 1 Reg 2 Western Stillworth Prepare the journal entries to record (a) issuance of the bonds by Western and (b) Stillworth's Investment on April 1, 2021. (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 1 2 Record the issuance of the bonds by Western Communications. Note: Enter debits before credits Debit General Journal Date Credit April 01, 2021 < Prey 3 of 3 !!! Next >

Answer 1

1. Journal Entry to record the issuance of the bonds by Western Communications: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ 2021 Apr.1 $42,300,000.00 $ 700,000.00 Cash Discount on Bonds Payable Bonds Payable (To record issue of Bonds at Discount) $ 43,000,000.00

2. Journal Entry to record the Bond Investment by Stillworth Corporation: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ 2021 Apr.1 $ 43,000.00 S 43,000.00 Investment in Bonds Cash (To record Investment in Bonds of Western Communications Inc.)