Adjust FVA at Sale and Year-End

On July 1 of the current year, West Company purchased for cash, 18, $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 in three years on July 1. 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. Note: When answering the following questions, round each amount to the nearest whole dollar.

• Amortization Schedule
• Journal Entries and Financial Statement Presentation for Year 1
• Journal Entries for Year 2

a. Prepare a bond amortization schedule for the current year and the following year using the effective interest method.

Date	Stated	Market	Discount	Bond
	Interest	Interest	Amortization	Amortized Cost
Jul. 1, Year 1				Answer
Jan. 1, Year 2	Answer	Answer	Answer	Answer
Jul. 1, Year 2	Answer	Answer	Answer	Answer