On January 1, 2022, MYN Construction sold $1,000,000 of 6% bonds to JINX Enterprise. The bonds mature on December 31, 2025 (4 years). For bonds of similar risk and maturity, the market yield was 8%.Interest is paid semiannually on June 30 and December 31.

JINX Enterprise purchased the bonds as an investment and plans to hold the bonds for approximately 2 years.

The fair value of the bonds at 12/31/22 was $985,000.

JINXs fiscal year end is December 31 and 2022 was its first year of business.

Required:

1. Prepare the fair value adjusting entry for JYNX Enterprise as of 12/31/22. Show your work.

2. Show or describe exactly and specifically what will appear on the Balance Sheet of JINX Enterprise as of 12/31/22, related to these bonds.

3. Show or describe exactly and specifically what will appear on the Income Statement of JINX Enterprise for the year ending 12/31/22.

4. Prepare the journal entries JINX Enterprise should make on the following dates related to this investment. Assume that the fair value of these bonds is $875,000 at 12/31/23. Show your work.

6/30/23:

12/31/23:

1. Assume Swift sells these bonds on 4/1/24 for $1,025,000.Prepare alljournal entries required on 4/1/24. Show your work.

Accrue interest as of 4/1/24:

Adjust to fair value as of 4/1/24:

Reclassification entry as of 4/1/24:

Record the sale of the investment on 4/1/24: