Presented below is an amortization schedule related to Spangler Company’s 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2023, for $108,660.

The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.

Instructions

a. Prepare the journal entry to record the purchase of these bonds on December 31, 2023, assuming the bonds are classified as held-to-maturity securities.

b. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2024.

c. Prepare the journal entry (entries) related to the held-to-maturity bonds for 2026.

d. Prepare the journal entry (entries) to record the purchase of these bonds, assuming they are classified as available-for-sale.

e. Prepare the journal entry (entries) related to the available-for-sale bonds for 2024.

f. Prepare the journal entry (entries) related to the available-for-sale bonds for 2026.

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Date 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 12/31/28 Cash Received $7,000 7,000 7,000 7,000 7,000 Interest Revenue $5,433 5,354 5,272 5,186 5,095 Bond Premium Amortization $1,567 1,646 1,728 1,814 1,905 Carrying Amount of Bonds $108,660 107,093 105,447 103,719 101,905 100,000