On January 1, 2020, Culver Company purchased $480,000, 10% bonds of Aguirre Co. for $444,669. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Culver Company uses the effective interest method to amortize discount or premium. On January 1, 2022, Culver Company sold the bonds for $446,262 after receiving interest to meet its liquidity needs. Your answer is partially correct. Try again. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (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 o for the amounts. Date Account Titles and Explanation Debit Credit Jan. 1, 2020 Debt Investments 444669 Cash 444669 SHOW LIST OF ACCOUNTS LINK TO TEXT Your answer is partially correct. Try again. Prepare the amortization schedule for the bonds. (Round answers to O decimal places, e.g. 1,250.) Schedule of Interest Revenue and Bond Discount Amortization-Effective Interest Method Bonds Purchased to Yield Interest Receivable Bond Carrying Or Interest Discount Amount of Date Cash Received Revenue Amortization Bonds 1/1/20 444669 7/1/20 24000 26680 2680 447349 24000 4501901 1/1/21 7/1/21 24000) 26841 27011 27192) 273841 2841 3011 3192 453201 1/1/22 24000 456394 7/1/22 240001 459777 1/1/23 240001 275871 463364 3384 3587 3802 4030 7/1/23 24000 467166 27802 28030 1/1/24 24000 471196) 7/1/24 240001 28272 4272 475467) X 1/1/25 24000 28528 4528 479995 Total $ 2400001 275327 35327 (c) Prepare the journal entries to record the semiannual interest on (1) July 1, 2020, and (2) December 31, 2020. (d) If the fair value of Aguirre bonds is $448,262 on December 31, 2021, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31, 2020, is a debit of $3,467.) (e) Prepare the journal entry to record the sale of the bonds on January 1, 2022. (Round answers to 0 decimal places, e.g. 2,500. 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 o for the amounts.) No. Date Account Titles and Explanation Debit Credit (c) (1) July 1, 2020 Cash 240001 Debt Investments 2680 Interest Revenue 26680 (2) Dec. 31, 2020 V Interest Receivable 24000 Debt Investments 2841 Interest Revenue 26841 x (d) Dec 31, 2021 Unrealized Holding Gair 4665 Debt Investments 4665 (e) Jan. 1, 2022 V Cash 446262 x Loss on Sale of Investor 2000 Debt Investments 448262
