On January $1,2025,$ Pharoah Company purchased $5\%$ bonds, having a maturity value of $$570,000$ for $$488,989.$ The bonds provide

the bondholders with a $7\%$ yield. They are dated January $1,2025,$ and mature January $1,2035,$ with interest receivable June $30$ and

December $31$ of each year. Pharoah 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.

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

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

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

$($Round answers to $0$ decimal places, e$.$g$.2,525.$ Credit account titles are automatically indented when the 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. List all debit entries before credit entries.$)$

No$.$

Date

$($a$)$

$($b$)$

Account Titles and Explanation

Bonds Payable

Cash

Interest Revenue

$($To record interest received$)$

Debit

$488,989\mathrm{.}00$

Cash

$[$

$$

To record interest received$)$

$($To recordinterestreceived$)$

$($To record fair value adjustment$)$

$($To record fair value adjustment$)$