On January 1,2025, SweetCompany purchased 12% bonds having a maturity value of $320,000 for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and aMature January 1, 2030, with interest received on January 1 of each year. Sweet Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31, of each year-end is as follows:

2025 $342,000

2026 $329,700

2027. $328,700

2028 $330,700

2029. $320,000

Prepare the journal entries to record the interest revenue and recognition of fair value for 2025.

Prepare the journal entry to record the recognition of fair value for 2026.