On January $1,2009,$ Korman Company purchased $9\%$ bonds having a maturity value of $$1,000,000$ for $$962,000.$ The bonds provide the bondholders with a $10\%$ yield. The coupon is paid annually on December $31.$ The bond market value was $$980,000$ on December $31,2009.$

Required:

Prepare the appropriate journal entry on December $31,2009,$ to properly value the bonds assuming the bonds are classified as:

$(1)$ Held$-$to$-$maturity securities$.$

$(2)$ Securities available$-$for$-$sale.

$(3)$ Trading securities$.$

B$.$ Equity Investments

Korman Company purchased some shares of Thomas Co$.$ and Gant Co$.$ in $2008.$ Korman carries the following investment on its books at December $31,2008,$ and December $31,2009.$ Korman has no significant influence. Investment on Thomas Co$.$ is classified as available$-$for$-$sale security while Gant is classified as trading security.

Company Cost Value, Dec. $31,2008$ Value Dec. $31,2009$

Thomas Co$.$ $$151,000$ $$139,000$ $$179,000$

Gant Co$.$ $$184,000$ $$190,000$ $$180,000$

Required:

Prepare the adjusting entries for Korman on:

$(1)$ December $31,2008.$

$(2)$ December $31,2009.$

$(3)$ What net effect $($in $$)$ would the valuation of these stock investments have on $2008$ net income? On $2009$ net income?b