Adjust FVA at Year-End

On July 1 of the current year, West Company purchased for cash, 8, $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.

Please fix the wrong part(c,d,e,f,g)

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 Interest Jul. 1, Year 1 Jan. 1, Year 2 $ Jul. 1, Year 2 Market Discount Bond Interest Amortization Amortized Cost 77,970 3,899 $ 299 78,269 3,913 313 78,582 3,600 $ 3,600 b. Record the entry for the purchase of the bonds by West Company on July 1. Credit Date Jul. 1, Year 1 Debit 77,970 0 Account Name Investment in AFS Securities Cash To record purchase of bonds. 0 77,970 c. Record the adjusting entries by West Company on December 31 to accrue interest revenue and adjust the investment to fair value. The fair value of the bonds at December 31 was $81,000. Debit Credit Date Account Name Dec. 31, Year 1 Interest Receivable Investment Income 3,600 0 299 X N/A 0 0 X To accrue interest revenue. Dec. 31, Year 1 0 0 X 0 0 x To adjust investment to fair value. d. Indicate the effects of this investment on the income statement for the year and year-end balance sheet. Ignore cash. Note: Do not use a negative sign for an account with a normal balance. Income Statement Other Revenues and Gains Interest revenue $ 3,899 3,600 Balance Sheet, December 31 Assets Interest receivable $ Investment in AFS Securities $ Stockholders' Equity Accumulated other comprehensive income $ 0 x 0X e. Record the receipt of interest on January 1 of the following year. Date Account Name Debit Credit Jan. 1, Year 2 0 0 X 0 X To record receipt of interest. f. After the interest receipt on July 1, two of the bonds were sold for $19,300 cash. Record the entry for (1) the receipt of interest and (2) the sale of the bond investment. Date Account Name Debit Credit Jul. 1, Year 2 0 OX 0 OX 0 0 x To record receipt of interest. Jul. 1, Year 2 0 OX 0 0X 0 0 X To record sale of investment. g. On December 31, the company's year-end, record the entry to eliminate the Fair Value Adjustment balance associated with the two bonds sold. Account Name Debit Credit Date Dec. 31, Year 2 0 X 0 0 x To eliminate FVA account balance