(I have ONE hour) On January 1, 2020, Sandy Cheeks Corporation purchased $70,000, 7%, 14-year bonds as a long-term investment, paying $75,600 cash. The bonds pay interest semi-annually each June 30 and December 31. Sandy Cheeks uses the straight-line amortization method.

Part A:

Identify the following information:

Face Value

Stated Rate of Interest

Annual Stated Interest

Semi-annual stated interest

Purchase Price of Bonds

Was the bond purchased at a premium or discount?

What was the amount of the premium or discount?

Part B:

Give all of the necessary journal entries for Sandy Cheeks Corporation to account for the long-term bond investment for 2020.

General Journal
Date	Account Titles (Debits)	Account Titles (credits)	DR	CR

Part C:

Indicate the names and balances of the accounts to be reported on Sandy Cheek's financial statements at the end of 2020:

Income Statement:		Balance Sheet:
Name of Account	Amount	Name of Account	Amount

Part D:

Short Answer

Why are long-term investments in bonds (purchased as held to maturity securities) not adjusted to their fair market value at the end of each period?