(Debt Securities) Presented below is an amortization schedule related to Kathy Baker Company’s 5-year, $100,000 bond with a 7% interest rate and a 5% yield, purchased on December 31, 2004, for

$108,660.

(a) Prepare the journal entry to record the purchase of these bonds on December 31, 2004, assuming the bonds are classified as held-to-maturity securities.

(b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2005.

(c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2007.

(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 2005.

(f) Prepare the journal entry(ies) related to the available-for-sale bonds for 2007.

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Date Cash Received Interest Revenue Bond Premium Carrying Amount Amortization of Bonds 12/31/04 $108,660 12/31/05 $7,000 $5,433 $1,567 107,093 12/31/06 7,000 5,354 1,646 105,447 12/31/07 7,000 5,272 1,728 103,719 12/31/08 12/31/09 7,000 7,000 5,186 5,095 1,814 101,905 1,905 100,000 The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end. 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 Amortized cost Fair value $107,093 $105,447 $103,719 $101,905 $100,000 $106,500 $107,500 $105,650 $103,000 $100,000