Brook Ltd. purchased 60 Meissner AG 8%, 10-year, 1,000 bonds on January 1, 2020, for 60,000. The bonds pay interest annually on January 1. The market value of the bonds was 60,726 at the end of 2020. On January 1, 2021, after receipt of interest, Brook sold 40 of the bonds for 40,484.

Instructions

A.

Brooks business model is to hold these bonds to collect contractual cash flows and sell. Prepare the journal entries to record the transactions described above.

B.

Brooks business model is to hold these bonds to collect contractual cash flows. Prepare the journal entries to record the transactions described above.

C.

Brooks business model is to hold these bonds for trading. Prepare the journal entries to record the transactions described above.