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, 2018, 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, 2018, assuming the bonds are classifi ed as held-to-maturity securities.

b. Prepare the journal entry(ies) related to the held-to-maturity bonds for 2019.

c. Prepare the journal entry(ies) related to the held-to-maturity bonds for 2021.

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

e. Prepare the journal entry(ies) related to the available-for-sale bonds for 2019.

f. Prepare the journal entry(ies) related to the available-for-sale bonds for 2021.

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Carrying Amount of Bonds Bond Premium Amortization Cash Interest Revenue Date Received 12/31/18 12/31/19 $108,660 107,093 $1,567 1,646 1,728 1,814 1,905 $5,433 5,354 5,272 5,186 5,095 $7,000 12/31/20 12/31/21 12/31/22 12/31/23 7,000 105,447 103,719 101,905 100,000 7,000 7,000 7,000 12/31/19 $107,093 12/31/22 $101,905 12/31/23 12/31/20 $105,447 12/31/21 $103,719 Amortized cost Fair value $100,000 106,500 107,500 105,650 103,000 100,000