Question

The Bradford Company issued 8% bonds, dated January 1, with a face amount of $50 million on January 1, 2013 to Saxton-Bose Corporation. The bonds mature on December 31, 2032 (20 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

  

Required:
1.	Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2013. (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.)
	2. Prepare the journal entry to record interest revenue on June 30, 2013 (at the effective rate). (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.)       3. Prepare the journal entry to record interest revenue on December 31, 2013 (at the effective rate). (Enter your answers in whole dollars. If no entry is required for a transaction, select "No journal entry required" in the first account field.)

Answer 1

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Prepare the journal entry to record the purchase of the bonds by Saxton-Bose on January 1, 2013.

Prepare the journal entry to record interest revenue on June 30, 2013 (at the effective rate).

Prepare the journal entry to record interest revenue on December 31, 2013 (at the effective rate).