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Joey Co. purchased bonds of $80 Million as a long-term investment. The bonds have a stated rate of 8% and are dated January 1, 2023,
Joey Co. purchased bonds of $80 Million as a long-term investment. The bonds have a stated rate of 8% and are dated January 1, 2023, which is also the purchase date. Management classifies this investment as available-for-sale. The bonds were priced to yield 10% and sold for $66 million. Interest is received semiannually on June 30 and December 31. Due to economic factors, the fair value of the bonds at December 31, 2023 was $70 million. Joey Co. used effective interest to amortize the investment. Required: 1. Prepare the entry to record Joey Co's investment on January 1, 2023. 2. Prepare the entry to record Joey Co's interest on June 30, 2023. 3. Prepare the entry to record Joey Co's interest on December 31, 2023. 4. At what amount will Joey Co. report its investment on December 31, 2023's balance sheet? Why? 5. Prepare the entry needed by Joey Co to report the investment amount you came up with in part 4
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