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On 6/1/18, Sugar Rush purchases bonds from Cookie Craving, paying $500,000. The bonds have a par value of $500,000, a stated rate of 9%, and
On 6/1/18, Sugar Rush purchases bonds from Cookie Craving, paying $500,000. The bonds have a par value of $500,000, a stated rate of 9%, and a maturity date of 5/31/22. Interest on the bonds is paid annually each 5/31. The fair value of the bonds equals $501,000 as of 12/31/18. Assume INSTEAD that Sugar Rush purchased the bonds with the intent to hold them passively for a while and then sell them before they mature. Sugar Rush makes an adjusting entry on 12/31/18 to adjust the investment to market value. What effect will this specific adjusting entry have on the company's net income (i.e., revenues / expenses)? If the adjusting entry will increase the company's net income, make your answer positive. If the adjusting entry will decrease the company's net income, make your answer negative. If there will be no effect on net income, answer with 'O. HINT: record all journal entries for the company, then answer the
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