On January 1, Gandini Company purchased $300,000 face value of Battaglias 8.4% bonds at a price of

On January 1, Gandini Company purchased $300,000 face value of Battaglia’s 8.4% bonds at a price of $283,439. At this price, the bonds yielded 9% annually. At December 31, Gandini received an interest check on these bonds of $25,200. The market price of these bonds that day was $282,000.

Required

A. Using the format presented in this chapter, show the entries that would be made to the accounting system to record the purchase of this investment and receipt of the interest check. Assume this is a long-term investment.

B. Show how this investment should be reported in the year-end financial statements by completing the table of information thatfollows.

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If the bonds ar Held-to- Available- maturityTrading for-sale securities securities securities Accounting method to be used Amount of unrealized holding gain (loss) Amount of unrealized holding gain (loss) Amount of discount amortized during Balance of investment account on balance sheet to be reported on income statement to be reported on balance sheet first year at end of the first year