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ABC Company purchased $1,200,000 of 8%, 5-year bonds from XYZ, Inc. on January 1,2021 , with interest payable on July 1 and January 1. The
ABC Company purchased $1,200,000 of 8%, 5-year bonds from XYZ, Inc. on January 1,2021 , with interest payable on July 1 and January 1. The bonds sold for $1,249,896 at an effective interest rate of 7%, and were held as available for sale. 1. Record the entry to purchase the bonds. 2. Prepare the following schedule for the first two periods using the effective interest method of amortization. Record the entry needed on 6/30/21 and 7/1/21. 3. At 12/31/21, the bonds had a fair value of $1,260,000. Prepare the journal entry for the fair value adjustment
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