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1 On January 1, 2019, Bridgeport and Lois Company purchased 12% bonds having a maturity value of $366,000 for $393,748.56. The bonds provide the bondholders

1 On January 1, 2019, Bridgeport and Lois Company purchased 12% bonds having a maturity value of $366,000 for $393,748.56. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature on January 1, 2024, with interest receivable on December 31 of each year. Bridgeport and Lois Company uses the effective interest method to allocate unamortized discount or premium. The bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year-end is as follows: 2019 2020 Instructions: $391,000 $377,000 1. Prepare the journal entries to record the interest received and recognition of fair value for 2019. Round answers to 2 decimal places, e.g. 52.75. (5 Marks) 2. Prepare the journal entries to record the recognition of fair value for 2020 and assuming the sale of the investment for $377,000 on December 31, 2020, reclassifying any accumulated holding gains or losses to net income. Round answers to 2 decimal places, e.g. 52.75. (6 Marks)image text in transcribed

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