On January 1, 2026, Baker Company purchased, as an investment, 5% bonds, having a maturity value of $150,000, for $138,400. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2026, and mature January 1, 2036, with interest receivable June 30 and December 31 of each year. The securities are classified as available-for-sale. Schedule of Interest Revenue and Bond Amortization Cash Received (2.5%) Interest Revenue (3.5%) Amortization Carrying Value January 1, 2026 -- -- -- 138,400 June 30, 2026 3,750 4,844 1,094 139,494 December 31, 2026 3,750 4,882 1,132 140,626 June 30, 2027 3,750 4,922 1,172 141,798 December 31, 2027 3,750 4,963 1,213 143,011 June 30, 2028 3,750 5,005 1,255 144,266 December 31, 2028 3,750 5,049 1,299 145,565 The fair value of the bonds at December 31 of each year-end is as follows. 2026 145,000 2027 148,000 2028 152,000 a) Prepare the journal entry at the date of the investment purchase. b) Prepare the journal entries to record the interest received on December 31, 2026 and recognition of fair value at December 31, 2026. c) Prepare the journal entry to record the recognition of fair value at December 31, 2027. d) Prepare the journal entry to record the recognition of fair value at December 31, 2028.

a)

b)

c)

d)