On January 1, 2017, Shamrock Company purchased 13% bonds, having a maturity value of $308,000, for $330,766.44. The bonds provide the bondholders with a 11% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Shamrock Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.

2017		$328,700		2020		$317,300
2018		$316,400		2021		$308,000
2019		$315,400

(a)		Prepare the journal entry at the date of the bond purchase.
(b)		Prepare the journal entries to record the interest revenue and recognition of fair value for 2017.

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No. Date (a) Jan. 1, 2017 (b) Dec. 31, 2017 ▼ (c) Dec. 31, 2018 ▼ Account Titles and Explanation Debt Investments Cash Cash x- Debt Investments Interest Revenue (To record interest received) (To record fair value adjustment) Debit 330,766.44 40040 > Credit 330,766.44 10.0 00 00 No. Date (a) Jan. 1, 2017 (b) Dec. 31, 2017 ▼ (c) Dec. 31, 2018 ▼ Account Titles and Explanation Debt Investments Cash Cash x- Debt Investments Interest Revenue (To record interest received) (To record fair value adjustment) Debit 330,766.44 40040 > Credit 330,766.44 10.0 00 00

Answer rating: 100% (QA)

a Journal Entries of Bond Purchase are as follows 1 ... View the full answer