On February $1,2024,$ Sanyal Motor Products issued $6\%$ bonds, dated February $1,$ with a face amount of $$75$ million.

The bonds mature on January $31,2028($four years$).$

The market yield for bonds of similar risk and maturity was $8\%.$

Interest is paid semiannually on July $31$ and January $31.$

Barnwell Industries acquired $$75,000$ of the bonds as a long$-$term investment.

The fiscal years of both firms end December $31.$

Required:

$1.$ Determine the price of the bonds issued on February $1,2024.$

$2-$a$.$ Prepare amortization schedules that indicate Sanyal$$s effective interest expense for each interest period during the term to maturity.

$2-$b$.$ Prepare amortization schedules that indicate Barnwell$$s effective interest revenue for each interest period during the term to maturity.

$3.$ Prepare the journal entries to record the issuance of the bonds by Sanyal and Barnwell$$s investment on February $1,2024.$

$4.$ Prepare the journal entries by both firms to record all events related to the bonds through January $31,2026.$

Answer rating: 100% (QA)

1 To determine the price of the bonds issued on February 1 2024 we can use the present value formula ... View the full answer