Excalibur Inc. purchased $10,000 of 6% Sub Company bonds at par on July 1, 2019. The bonds pay interest semiannually. Excalibur intends to sell the Sub Company bonds if the price of the bonds appreciates sufficiently. During the second half of 2019, an increase in interest rates reduced the fair value of the bonds to $9,000. Required: 1. Prepare the July 1, 2019, journal entry to record Excaliburs investment. 2. Prepare the December 31, 2019, journal entry to record Excaliburs interest revenue. 3. Prepare the December 31, 2019, journal entry (if any is required) to record unrealized gains or losses on the Subs bonds during 2019. (Do not consider whether an impairment should be recorded.) 4. Suppose Excalibur intends, instead, to hold on to the bonds for the purpose of receiving cash interest for the term of the bonds. How would the bonds be reported?

Investments Part A: At December 31, 2019, Excalibur Corp. had the following investments that were purchased during 2019, its first year of operations: Cost Fair Value Trading Securities: Security A $ 900,000 $ 910,000 Security B 105,000 100,000 Totals $1,005,000 $1,010,000 Securities Available-for-Sale: Security C Security D $ 700,000 900,000 $ 780,000 915,000 $1,695,000 Totals $1,600,000 Securities to Be Held-to-Maturity: $ 490,000 Security E Security F $ 500,000 610,000 615,000 Totals $1,105,000 $1,110,000 No investments were sold during 2019. All securities except Security D and Security F are considered short-term investments. None of the fair value changes is considered permanent