On January 1, 2025, Nash Company purchased $450,000, 10% bonds of Aguirre Co. for $416,878. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Nash Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Nash Company sold the bonds for $418,480 after receiving interest to meet its liquidity needs.

On January 1,2025 , Nash Company purchased $450,000,10% bonds of Aguirre Co. for $416,878. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Nash Company uses the effective-interest method to amortize discount or premium. On January 1,2027, Nash Company sold the bonds for $418,480 after receiving interest to meet its liquidity needs. (c) Prepare the journal entries to record the semiannual interest on July 1,2025, and December 31, 2025. (d) If the fair value of Aguirre bonds is $420,480 on December 31, 2026, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31,2025 , is a debit of $3,178.) (e) Prepare the journal entry to record the sale of the bonds on January 1, 2027. (List all debit entries before credit entries. 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 0 for the amounts. Round answers to 0 decimal places, e.g. 1,225. Record journal entries in the order presented in the problem.) On January 1,2025 , Nash Company purchased $450,000,10% bonds of Aguirre Co. for $416,878. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Nash Company uses the effective-interest method to amortize discount or premium. On January 1,2027, Nash Company sold the bonds for $418,480 after receiving interest to meet its liquidity needs. (c) Prepare the journal entries to record the semiannual interest on July 1,2025, and December 31, 2025. (d) If the fair value of Aguirre bonds is $420,480 on December 31, 2026, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31,2025 , is a debit of $3,178.) (e) Prepare the journal entry to record the sale of the bonds on January 1, 2027. (List all debit entries before credit entries. 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 0 for the amounts. Round answers to 0 decimal places, e.g. 1,225. Record journal entries in the order presented in the problem.)