On January 1, 2020, Spikes Corporation sold $100,000 of 4% bonds to Harris Company. The bonds mature on December 31, 2024 (5 years). For bonds of similar risk and maturity, the market yield was 6%. Interest is paid semiannually on June 30 and December 31. Harris Company purchased the bonds as an investment for $91,575. Harris plans to hold the bonds for approximately 2 years. After all interest has been recorded in 2020, the carrying value at 12/31/20 is $93,092. The fair value of the bonds at 12/31/20 was $94,250. Harriss fiscal year end is December 31 and 2020 was its first year of business.

a) Prepare the fair value adjusting entry for Harris Company as of 12/31/20. Show your work.

b) Show or describe exactly and specifically what will appear on the Balance Sheet of Harris Company as of 12/31/20, related to these bonds.

c) Show or describe exactly and specifically what will appear on the Income Statement of Harris Company for the year ending 12/31/20.

d) Prepare the journal entries Harris Company should make on the following dates related to this investment. Assume that the fair value of these bonds is $94,500 at 12/31/21. Show your work.

e) Assume Harris sells these bonds on 3/1/22 for $96,000. Prepare all journal entries required on 3/1/22. Show your work.