. On April 1, 2021, Ghost Co. purchased $120,000 of six percent, 10-year bonds to yield 5%. The bonds are accounted for as a fair value net income investment. Interest is paid on October 1 and April 1, and the bonds mature on July 1, 2026. The fair market value on December 31, 2021, was $126,000. Ghost follows IFRS and uses the effective interest method.

The bonds are sold on March 1, 2022, at 103 plus accrued interest. (round to the nearest dollar)

Instructions

Prepare the following journal entries:

April 1, 2021, purchase

Oct. 1, 2021, interest payment

Dec. 31, 2021, interest accrual

Dec. 31, 2021, fair value adjustment.

March 1, 2022, interest accrual and sale.