Share
Explore BrainMass

The Bradford Company: Record Bonds by Saxton-Bose 2011

The Bradford Company sold 12% bonds, dated January 1, with a face amount of $85 million on January 1, 2011 to Saxton-Bose Corporation. The bonds mature in 2020 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31.

1) Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2011. (Enter your answers in dollars not in millions. Round "PV Factor" to 5 decimal places and final answers to the nearest whole dollar amount)

2) Prepare the journal entry to record interest revenue on June 30, 2011 (at the effective rate). (Enter your answers in dollars not in millions. Round "PV Factor" to 5 decimal places and final answers to the nearest whole dollar amount)

3) Prepare the journal entry to record interest revenue on December 31, 2011 (at the effective rate). (Enter your answers in dollars not in millions. Round "PV Factor" to 5 decimal places and final answers to the nearest whole dollar amount)

Solution Summary

A full amortization for all 20 payments is shown and then the journal entries for purchase, first payment date and second payment date are shown. See excel attached. Click in cells to see computations.

$2.19