On January $1,2025,$ Novak Company purchased $12\%$ bonds having a maturity value of $$296,000$ for

$$318,441\mathrm{.}18.$ 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. Novak Company uses the effective$-$

interest method to allocate unamortized discount or premium. The bonds are classified as available$-$for$-$sale

category. The fair value of the bonds at December $31$ of each year$-$end is as follows.

$($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 $2026.$

$($List all debit entries before credit entries. Credit account titles are automatically indented when

amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account

titles and enter $0$ for the amounts. Round answers to $2$ decimal places, e$.$g$.1225\mathrm{.}25.)$

No$.$

Date

Account Titles and Explanation

Debit

$($a$)$

$($b$)$

$[]$

$($To record interest received$)$

$($To record fair value adjustment$)$

$($c$)$

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