Recording Entries under the Fair Value Option-HTM On January 1, 2020, Josie Inc. purchased for...
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Recording Entries under the Fair Value Option-HTM On January 1, 2020, Josie Inc. purchased for cash ten, $1,000, 4% bonds of Star Corp. at par. The bond interest is paid annually on January 1 of each year, and the bonds mature on January 1, 2030. Josie has the intent and ability to hold the bonds over the full term and has elected to account for the bonds using the fair value option. The fair value of the bonds on December 31, 2020, is $9,500. Prepare the following entries for Josie Inc. Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). a. Record the entry for the purchase of the bonds on January 1, 2020. Date Account Name Dr. Jan. 1, 2020 Investment in HTM Securities 9,900 x Cash Cr. . 0 9,900 x 0 Dr. Cr. b. Record any required adjusting entries on December 31, 2020. Date Account Name Dec. 31, 2020 Interest Receivable Interest Revenue 0 x 0 0 0 OX OX 0 To accrue interest. Dec. 31, 2020 Interest Receivable Interest Revenue To adjust investment to fair value. X 4 x 0 OX Cr. c. Record the entry for the receipt of interest on January 1, 2021. Date Account Name Dr. Jan. 1, 2021 Cash Interest Receivable 0 0 0 x
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