Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale.

Instructions(a) Indicate whether the bonds were purchased at a discount or at a premium.(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2012. The Fair ValueAdjustment account has a debit balance of $1,000 prior to adjustment.(c) Prepare the adjusting entry to record the bonds at fair value at December 31,2013.

Transcribed Image Text:

12/31/12 12/31/14 12/31/13 $519,442 Amortized cost Fair value $491,150 $550,000 $497,000 $509,000 $550,000