Metro Company purchased $100,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July 1 and January 1. The bonds sold for $108,111, which results in an effective interest rate of 8%. The market value on December 31, 20x1 was $105,000 and all bonds were sold for $107,500 on January 1, 20x2.

Required: Prepare journal entries on January 1, 20x1, July 1, 20x1, December 31, 20x1 and January 1, 20x2 assuming the bond investment is classified as

(Trading Security)

1/1/x1

7/1/x1

12/31/x1

1/1/x2

(Available-for-Sale Security)

1/1/x1

7/1/x1

12/31/x1

1/1/x2

(Held-to-Maturity Security)

1/1/x1

7/1/x1

12/31/x1

1/1/x2