Floyd Limited had the following transactions pertaining to debt investments.

Jan. $1,2025$ Purchased $601,200$ Petal Co$.5\%$ bonds for $72,000$ cash and classified as financial assets at amortized cost. Interest is payable annually on January $1.$

Dec. $31,2025$ Accrued interest on the Petal Co$.$ bonds.

Jan. $1,2026$ Received interest on Petal Co$.$ bonds.

Jan. $1,2026$ Sold $45$ Petal Co$.$ bonds for $45,000.$

INSTRUCTIONS

a$.$ Journalize the transactions.

b$.$ Prepare the adjusting entry for the accrual of interest at December $31,2026.$