On January 1, 2018, Ellison Company purchased 12% bonds, having a maturity value of 800,000, for 860,652. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2018, and mature January 1, 2023, with interest receivable December 31 of each year. Ellison's business model is to hold these bonds to collect contractual cash flows.

Instructions

(1) Prepare a bond amortization schedule through 2019.

(2) Prepare any entries necessary at December 31, 2019, using the fair value option, assuming the fair value of the bonds is 840,000.