On December 31, 2018, M Company held X Company bonds in its portfolio of available-for-sale securities. The bonds have a par value of $15,000, carry a 10% annual interest rate, mature in 2025, and had originally been purchased at par. The market value of the bonds at December 31, 2018 was $13,000. The December 31, 2018, balance sheet showed the following:

M Company

Partial Balance Sheet

December 31, 2018

1	Assets
2	Investment in Available-for-Sale Securities	$15,000.00
3	Less: Allowance for Change in Fair Value of Investment	(2,000.00)
4		$13,000.00
5	Shareholders Equity:
6	Unrealized Holding Gain/Loss	$(2,000.00)

On January 1, 2019, M acquired bonds of Y Company with a par value of $16,000 for $16,200. The Y Company bonds carry an annual interest rate of 12% and mature on December 31, 2023. Additionally, M acquired Z Company bonds with a face value of 18,000 for $17,600. The Z Company bonds carry an 8% annual interest rate and mature on December 31, 2028. At the end of 2019, the respective market values of the bonds were: X, $14,000; Y, $17,000; and Z, $20,000. M classifies all of the debt securities as available-for-sale as it does not intend to hold them to maturity nor does it intend to actively buy and sell them. Assume that M uses the straight-line method to amortize any discounts or premiums.

Required:

1.	Prepare the journal entries necessary to record the purchase of the investments on January 1, 2019, the annual interest payments on December 31, 2019, and the adjusting entry needed on December 31, 2019.
2.	What would M disclose on its December 31, 2019, balance sheet related to these investments?

CHART OF ACCOUNTS

M Company

General Ledger

	ASSETS
111	Cash
114	Investment in Available-for-Sale Securities
119	Allowance for Change in Fair Value of Investment
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings
391	Unrealized Holding Gain/Loss: Available-for-Sale Securities

	REVENUE
411	Sales Revenue
431	Interest Income

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense