Pagnucci Carecenters Inc. provides financing and capital to the health-care industry, with a particular focus on nursing

Question:

Pagnucci Carecenters Inc. provides financing and capital to the health-care industry, with a particular focus on nursing homes for the elderly. The following selected transactions relate to bonds acquired as an investment by Pagnucci, whose fiscal year ends on December 31. 2012
Jan. 1 Purchased at $2,000,000 of Franco Nursing Centers, Inc., 10-year, 8% bonds dated January 1, 2012, directly from Franco.
July 1 Received the semiannual interest on the Franco bonds.
Dec. 31 Accrual of interest at year-end on the Franco bonds.
(Assume that all intervening transactions and adjustments have been properly recorded and that the number of bonds owned has not changed from December 31, 2012, to December 31, 2014.) 2015
Jan. 1 Received the semiannual interest on the Franco bonds.
Jan.1 Sold $1,000,000 Franco bonds at 106. The deducted $6,000 for commissions and fees on the sale.
July 1 Received the semiannual interest on the Franco bonds.
Dec. 31 Accrual of interest at year-end on the Franco bonds.
Instructions
(a) Journalize the listed transactions for the years 2012 and 2015.
(b) Assume that the fair value of the bonds at December 31, 2012, was $2,200,000. These bonds are classified as available-for-sale securities. Prepare the adjusting entry to record these bonds at fair value.
(c) Based on your analysis in part (b), show the presentation of the bonds and interest receivable at December 31, 2012. Assume the investments are considered long-term. Indicate where any unrealized gain or loss is reported in the financial statements.

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