On January $1,2025,$ Hi and Lois Company purchased $12\%$ bonds having a maturity value of $$300,000$ for $$322,744\mathrm{.}44.$ The bonds provide the bondholders with a $10\%$ yield. They are dated January $1,2025,$ and mature January $1,2030,$ with interest received on January $1$ of each year. Hi and Lois Company uses the effective$-$interest method to allocate unamortized discount or premium. The bonds are classified as available$-$for$-$sale. The fair value of the bonds at December $31$ of each year$-$end is as follows.

$2025$ $$320,500$

$2026$ $$309,000$

$2027$ $$308,000$

$2028$ $$310,000$

$2029$ $$300,000$

$$Instructions

a$.)$Prepare the journal entry at the date of the bond purchase.

b$.)$ Prepare the journal entries to record the interest revenue and recognition of fair value for $2025.$

c$.)$ Prepare the journal entry to record the recognition of fair value for $2026.$