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Garfield Company purchased, as an available-for-sale security, $85,000 of the 9%, 6-year bonds of Chester Corporation for $77,808, which provides an 11% return. Prepare Garfields
Garfield Company purchased, as an available-for-sale security, $85,000 of the 9%, 6-year bonds of Chester Corporation for $77,808, which provides an 11% return. Prepare Garfields journal entries for (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $80,750.
No. Account Titles and Explanation Debit Credit TD (a) TDebt Investments 77,808 Cash 77,808 (b) TCash 7,650 Debt Investments 909 Interest Revenue 8,559 (C) Unrealized Holding Gain or 2,942 Fair Value Adjustment 2,942Step by Step Solution
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