a. Journal entry at the date of the bond purchase.

Date Account Title Db Cr

Debt Investment $ 537,907.40
Cash $ 537,907.40

b. Bond amortization schedule.

Date Cash Received (500.000 x 12%) Interest Revenue Premium Amortization
1/1/2022
12/31/2022 $ 60,000.00 $ 53,790.74 $ 6,209.26
12/31/2023 $ 60,000.00 $ 53,169.81 $ 6,830.19
12/31/2024 $ 60,000.00 $ 52,486.80 $ 7,513.20
12/31/2025 $ 60,000.00 $ 51,735.48 $ 8,264.52
12/31/2026 $ 60,000.00 $ 50,909.77 $ 9,090.23

c. Prepare the journal entry to record the interest received and the amortization for 2022.
Date Account Title Db Cr
Cash $ 60,000.00
Debt Investment (Held-to-Maturity) $ 6,209.26
Interest Revenue $ 53,790.74
Total $ 60,000.00 $ 60,000.00

d. Prepare the journal entry to record the interest received and the amortization for 2023.
Date Account Title Db Cr
Cash $ 60,000.00
Debt Investment (Held-to-Maturity) $ 6,830.19
Interest Revenue $ 53,169.81
Total $ 60,000.00 $ 60,000.00
Carriying Amount
$ 537,907.40
$ 531,698.14
$ 524,867.95
$ 517,354.75
$ 509,090.23
$ 500,000.00
a. Prepare the journal entry at the date of the bond purchase
Date Account Title Db
Debt Investments $ 537,907.40
Cash

b. Prepare the journal entries to record the interest received and recognition of fair value for 2022
Date Account Title Db
Cash $ 60,000.00
Debt Investments
Interest Revenue
Fair Value Adjustment $ 2,501.86
Unrealized Holding Gain or Loss-Income
Total $ 62,501.86

c. Prepare the journal entry to record the recognition of fair value for 2023.
Amortized Cost
Debt Investments $ 524,867.95
Previous fair value adjustment-Db
Fair value adjustment-Cr

Unrealized Holding Gain or Loss - Income $ 12,369.81

Fair Value Adjustment
 Cr

$ 537,907.40

fair value for 2022

Cr

$ 6,209.26
$ 53,790.74

$ 2,501.86
$ 62,501.86

Fair Value Unrelized Holding Gain or Loss

$ 515,000.00 $ 9,867.95
$ 2,501.86
$ 12,369.81

$ 12,369.81
a. Prepare the adjusting entry at December 31, 2022, to report the portfolio at fair value.
Date Account Title Db Cr
Unrealized Holding Gain or Loss-Equity € 1,500.00
Previous fair value adjustment balance € 400.00
Fair value adjustment € 1,100.00

b. Show the statement of financial position presentation of the investment-related accounts at December 31, 2022. (Ig
Statement of Financial Position
Investment
Debt Investment (HFCS) € 54,500.00
Current Assets
Interest Receivable xxx
Equity
Accumulated Other comprehensive loss € 1,500.00

c. Prepare the journal entry for the 2023 sale of security A

Amortized Cost € 17,500.00
Less : Selling price of bonds € 15,100.00
Loss on sale of bonds € 2,400.00

Cash € 15,100.00
Loss on Sale of Investments € 2,400.00
Debt of Investments € 17,500.00
ecember 31, 2022. (Ignore notes presentation.)