On January 1, 2015, Novotna company purchased $400,000, 8% bonds of Aguirre Co. for $369,114. The bonds were purchased to yield 10% interest. interest is payable semianually on July 1 and January 1. The bonds mature on January 1,2020. Novotna Company plans to hold the bonds to collect contractual cash flows. On January 1, 2017, after receiving interest, Novotna Company sold the bomds for $370,726 after receiving interest to meet its liquidity needs.

a) Assume that Novotna elected the fair value option for this investment. if the fair valie of Aguirre bonds is $368,000 December 31, 2015. Prepare the necessary adjusting entry.