On January 1, 2020, Blossom Company purchased $310,000, 6% bonds of Aguirre Co. for $284,855....
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Accounting
On January 1, 2020, Blossom Company purchased $310,000, 6% bonds of Aguirre Co. for $284,855. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Blossom Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Blossom Company sold the bonds for $286,344 after receiving interest to meet its liquidity needs.
(c)
Prepare the journal entries to record the semiannual interest on (1) July 1, 2020, and (2) December 31, 2020.
(d)
If the fair value of Aguirre bonds is $288,344 on December 31, 2021, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31, 2020, is a debit of $3,692.)
(e)
Prepare the journal entry to record the sale of the bonds on January 1, 2022.
(Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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