1 Problem 4 (discount, temporary appreciation, AFS 2 On June 30, 2020 ABC purchased $500,000 par value bonds dated June 30, 2020 at a purchase price of 3 $462,806. The coupon rate on the bonds is 5% per year and the purchase price of the bonds yield an 4 effective rate of 6% per year. The bonds pay interest semiannually on June 30 and December 31" and 5 mature on June 30, 2030. The fiscal year of ABC ends on December 31st. The fair market value of the 6 bonds on December 31, 2020 was 470,000. ABC received the December 31 interest payment on 7 December 31, 2020. ABC classifies the bonds as Available-For-Sale. 8 9 10 All questions below pertain to the accounting for the investment by ABC. 11 12 1. Prepare all journal entries related to the bond investment that is necessary for ABC to issue GAAP 13 compliant financial statements for the year ended December 31, 2020. 14 15 Enter your an wer below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the enti 16 Entry to record purchase of bond on 6/30/2020: 17 18 Account Debit Credit 19 1 20 1 21 1 22 23 Entries at 12/31/2020: 24 25 Account Debit Credit 26 27 28 NNN 5 2. What will be the post-adjustment December 31, 2020 amortized cost of the bond? 86 7 Enter your answer in the green box 3 58 89 3. What will be the post-adjustment December 31, 2020 balance in the Fair Value Adjustment account? 30 1 Enter your answer in the green box 4 12 43 4. What amount of interest revenue will be reported on the 2020 income statement? 14 45 Enter your answer in the green box 5 46 47 5. At what amount will the investment in bonds be reported in the asset section of the December 31, 2020 48 balance sheet? 49 50 Enter your answer in the green box 6 51 52 6. What amount of unrealized holding gain (if any) will be reported as a component of net income for the 53 year ended December 31, 2020? 54 55 Enter your answer in the green box 7 56 57 7. What amount of unrealized holding gain (if any) will be reported as a component of other 58 comprehensive income for the year ended December 31, 2020? 59 60 Enter your answer in the green box 8 1 28. Assume that ABC sold the bonds on January 2, 2021 for $471,000. Prepare all entries to record the 3 sale 4 5 Enter your answer below. Choose the account from the drop-down list in the yellow cell. Enter the amount of the entry in 6 Entry to record sale of bond on 1/2/2021: 7 Account Debit Credit 8 9 0 1 2 ooooooo 4 5 6 7