Entries for Available-for-Sale Securities assume the same information as in E17-3 except that the securities are classified

Question:

Entries for Available-for-Sale Securities assume the same information as in E17-3 except that the securities are classified as available-for-sale. The fair value of the bonds at December 31 of each yearend is as follows.

2009 $534,200

2010 $515,000

2011 $513,000

2012 $517,000

2013 $500,000

(a) Prepare the journal entry at the date of the bond purchase.

(b) Prepare the journal entries to record the interest received and recognition of fair value for 2009.

Bonds
When companies need to raise money, issuing bonds is one way to do it. A bond functions as a loan between an investor and a corporation. The investor agrees to give the corporation a specific amount of money for a specific period of time in exchange...