On January 1, 2021, Hannah the Great Enterprises sold $780,000 of 8% bonds to Gracelyn Company. The bonds mature on December 31, 2024 (4 years). For bonds of similar risk and maturity, the market yield was 11%. Interest is paid semiannually on June 30 and December 31. Gracelyn Company purchased the bonds as an investment and plans to hold the bonds for approximately 2 years. The fair value of the bonds at 12/31/21 was $715,482. Gracelyn's fiscal year end is December 31 and 2020 was its first year of business. Required: Prepare the fair value adjusting entry for Gracelyn Company as of 12/31/21. Show your work. Show or describe exactly and specifically what will appear on the Balance Sheet of Gracelyn Company as of 12/31/21, related to these bonds. Show or describe exactly and specifically what will appear on the Income Statement of Gracelyn Company for the year ending 12/31/21.