E17-2B (Entries for Held-to-Maturity Securities) On July 1, 2014, Salt Mine Corporation purchased at par 8% bonds having a maturity value of $250,000. The bonds are dated July 1, 2014, and mature July 1, 2019, with interest payable on July 1 of each year. The bonds are classified in the held-to-maturity category, and the company does not use reversing entries.

(a) Prepare the journal entry at the date of the bond purchase.

(b) Prepare the journal entry to record the interest earned and interest received for 2014.

(c) Prepare the journal entries to record the interest earned and interest received for 2015.

E17-5B (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2014, Falcon Electro acquires $400,000 of 8% bonds at a price of $442,376. The interest is payable each December 31, and the bonds mature December 31, 2034. The investment will provide Falcon Electro a 7% yield. The bonds are classified as held-to-maturity.

(a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method.

(b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.

(c) Prepare the journal entry for the interest receipt of December 31, 2015, and the discount amortization under the straight-line method.

(d) Prepare the journal entry for the interest receipt of December 31, 2015, and the discount amortization under the effective-interest method.

E17-9B (Available-for-Sale Securities Entries and Financial Statement Presentation) At December 31, 2014, the available-for-sale equity portfolio for Zorro Foods Corp. is as follows.

Security Cost Fair Value

Apple $ 33,600 $ 31,000

Banana 175,000 174,000

Crisp 59,400 68,500

Total $268,000 $273,500

December 31, 2013, securities fair value adjustment balance