2 Adjust FVA at Sale and Year-End On July 1, 2020, West Company purchased for cash, eight $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as AFS securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Required a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. b. Record the entry for the purchase of the bonds by West Company on July 1, 2020. c. Record the adjusting entries by West Company on December 31, 2020, to accrue interest revenue and adjust the investment to fair value. The fair value of the bonds at December 31, 2020, was $81,000. d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. e. Record the receipt of interest on January 1, 2021. f. After the interest receipt on July 1, 2021, two of the bonds were sold for $19,300 cash. 1. Record the receipt of interest on July 1, 2021. 2. Record the entry to adjust the two bonds to fair value (FV-OCI). 3. Record the sale, eliminating the associated Fair Value Adjustment account balance. For simplicity, ig- nore any fair value adjustments in 2021 related to the six remaining bonds. 2 Adjust FVA at Sale and Year-End On July 1, 2020, West Company purchased for cash, eight $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as AFS securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Required a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. b. Record the entry for the purchase of the bonds by West Company on July 1, 2020. c. Record the adjusting entries by West Company on December 31, 2020, to accrue interest revenue and adjust the investment to fair value. The fair value of the bonds at December 31, 2020, was $81,000. d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. e. Record the receipt of interest on January 1, 2021. f. After the interest receipt on July 1, 2021, two of the bonds were sold for $19,300 cash. 1. Record the receipt of interest on July 1, 2021. 2. Record the entry to adjust the two bonds to fair value (FV-OCI). 3. Record the sale, eliminating the associated Fair Value Adjustment account balance. For simplicity, ig- nore any fair value adjustments in 2021 related to the six remaining bonds