$($Entries for Available$-$for$-$Sale Securities$)$

On January $1,2017,$ Hi and Lois Company purchased $12\%$ bonds having a maturity value of $$300,000$ for $$322,744\mathrm{.}44.$ The bonds provide the bondholders with a $10\%$ yield. They are dated January $1,2017,$ and mature January $1,2022,$ with interest receivable on January $1$ of each year. Hi and Lois Company uses the effective$-$interest method to allocate unamortized discount or premium. The securities are classified as available$-$for$-$sale. The fair value of the bonds at December $31$ of each year$-$end is as follows.

Instructions

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

$($b$)$ Prepare the journal entries to record the interest revenue and recognition of fair value for $2017.$

$($c$)$ Prepare the journal entry to record the recognition of fair value for $2018.$