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Computer Project FINANCIAL REPORTING II - SUMMER 2021 As a recently hired accountant for Reeves Incorporated., you are provided with last year's balance sheet to familiarize yourself with the business. Reeves Incorporated Balance Sheet December 31, 2020 Assets Current Assets Cash Accounts Receivable Short-term Investments Inventories Prepaid Expenses Total Current Assets $1,054.312 123,200 738,054 578,366 82,310 $2,576,242 Property, plant and equip (net) Intangibles and other assets 832,400 692,175 Total Assets $4,100,817 Current Liabilities Accounts payable Short-term notes Other current liabilities Total Current Liabilities 69,210 131,870 200.574 $401,654 Long-term debt Total Liabilities 1,962,357 $2,364,011 Stockholders' Equity Common Stock Retained Earnings 1,421,300 315,506 Total Stockholder's Equity $1,736,806 Total liabilities + Stockholder's $4,100,817 1. The company acquired as a long-term investment $1 million of 6% bonds, on March 1, 2021. Company management has the positive intent and ability to hold the bonds until they mature in 5 years on March 1, 2026. The market interest rate was 8% for the bonds and the company paid $918,891.04 for the bonds. The company will receive interest semiannually on August 31st and February 28th. As a result of changing market conditions, the fair value of the bonds at December 31, 2021 was $1,050,000. Required: a. Prepare the journal entry to record the investment in the bonds on March 1, 2021 b. Prepare the journal entry to record the interest payment received on August 31, 2021 using the effective (market) interest method c. Prepare the adjusting entry (if necessary) for the change in fair value of the bond at December 31, 2021