1. Accounting for Available-for-Sale Debt Investments (17 pts)

On 1 January 2022, Arthur, Inc. purchased 4.5% (annual) Blues Clues (BC) (issuer) bonds with a par value of $250,000. The bonds provide the bondholders with a 5% (annual) yield, are dated 1 January 2022, and mature 1 January 2032. Interest is receivable 1 July and 1 January of each year, beginning on 1 July 2022. Arthur, Inc. designates the BC bonds in the Available-for-Sale (AFS) portfolio. You are answering the questions below from the perspective of Arthur, Inc.

Required:

(a) Calculate the cost of the BC bonds for Arthur, Inc. and prepare the journal entry on 1 January 2022. What type of cash flow has Arthur, Inc. made? (3 pts)

(b) Construct an amortization schedule through 1/1/2024. (2 pts)

(c) Prepare the journal entries to record the interest received and amortization for 2022. (3 pts)

(d) Arthur, Inc.s BC bonds have a market value on 31 December 2022 of $241,000. Prepare the fair value adjustment journal entry, if necessary. (2 pts)

(e) On 1 July 2023, after receiving the interest payment on the entire issue, Arthur, Inc. sold BC bonds with a par value of $100,000 for $96,750. Prepare the journal entry to record the sale of the bonds. (2 pts)

(f) Prepare the journal entry to recognize interest earned on Arthur, Inc.s BC bonds on 31 December 2023. (2 pts)

(g) The fair value of Arthur, Inc.s remaining BC bonds on 31 December 2023 is $148,000. What is the overall impact on Arthur, Inc.s net income as a result of its investment in BC bonds in 2023? (3 pts)

1. Accounting for Available-for-Sale Debt Investments (17 pts) On 1 January 2022, Arthur, Inc. purchased 4.5\% (annual) Blue's Clue's (BC) (issuer) bonds with a par value of $250,000. The bonds provide the bondholders with a 5% (annual) yield, are dated 1 January 2022, and mature 1 January 2032. Interest is receivable 1 July and 1 January of each year, beginning on 1 July 2022. Arthur, Inc. designates the BC bonds in the Available-for-Sale (AFS) portfolio. You are answering the questions below from the perspective of Arthur, Inc. Required: (a) Calculate the cost of the BC bonds for Arthur, Inc. and prepare the journal entry on 1 January 2022. What type of cash flow has Arthur, Inc. made? (3 pts) (b) Construct an amortization schedule through 1/1/2024. (2 pts) (c) Prepare the journal entries to record the interest received and amortization for 2022. (3 pts) (d) Arthur, Inc.'s BC bonds have a market value on 31 December 2022 of $241,000. Prepare the fair value adjustment journal entry, if necessary. ( 2 pts) (e) On 1 July 2023, after receiving the interest payment on the entire issue, Arthur, Inc. sold BC bonds with a par value of $100,000 for $96,750. Prepare the journal entry to record the sale of the bonds. ( 2 pts) (f) Prepare the journal entry to recognize interest earned on Arthur, Inc.'s BC bonds on 31 December 2023. (2 pts) (g) The fair value of Arthur, Inc.'s remaining BC bonds on 31 December 2023 is $148,000. What is the overall impact on Arthur, Inc.'s net income as a result of its investment in BC bonds in 2023 ? (3pts)