Adjust FVA at Sale and Year-End On July 1, 2020, West Company purchased for cash, six $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. Amortization Schedule Journal Entries and FS Presentation for 2020 Journal Entries for 2021 Dr. Cr. e. Record the receipt of interest on January 1, 2021. Date Account Name Jan. 1, 2021 Cash Interest Receivable 0 2,700 0 2,700 f. After the interest receipt on July 1, 2021, two of the bonds were sold for $15,440 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, ignore any fair value adjustments in 2021 Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Dr. Cr. 0 OX 0 X X X X 0 x 0 OX Date Account Name (1) July 1, 2021 Cash Interest Receivable Cash To record receipt of interest. (2) July 1, 2021 Cash Cash To adjust to fair value investments to be sold. (3) July 1, 2021 Fair Value Adjustment--TS Investment in TS Investment in TS Interest Receivable Interest Receivable To record sale of investments. OX 0 0 X 0 0 OX x 0 OX Adjust FVA at Sale and Year-End On July 1, 2020, West Company purchased for cash, six $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. Amortization Schedule Journal Entries and FS Presentation for 2020 Journal Entries for 2021 Dr. Cr. e. Record the receipt of interest on January 1, 2021. Date Account Name Jan. 1, 2021 Cash Interest Receivable 0 2,700 0 2,700 f. After the interest receipt on July 1, 2021, two of the bonds were sold for $15,440 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, ignore any fair value adjustments in 2021 Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Dr. Cr. 0 OX 0 X X X X 0 x 0 OX Date Account Name (1) July 1, 2021 Cash Interest Receivable Cash To record receipt of interest. (2) July 1, 2021 Cash Cash To adjust to fair value investments to be sold. (3) July 1, 2021 Fair Value Adjustment--TS Investment in TS Investment in TS Interest Receivable Interest Receivable To record sale of investments. OX 0 0 X 0 0 OX x 0 OX
