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On July 1, 2020, Easton Company purchased for cash, twenty $10,000 bonds of Southern Corporation to yield 10%. The bonds pay 9% interest, payable on

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On July 1, 2020, Easton Company purchased for cash, twenty $10,000 bonds of Southern Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as Available-for-Sale (AFS) securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Required: Show all calculations and use proper format. a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. b. Record the entry for the purchase of the bonds by Easton Company on July 1, 2020. C. Record the adjusting entry by Easton Company on December 31, 2020, to accrue interest revenue. d. Record the adjusting entry by Easton Company on December 31, 2020 to adjust the investment to fair value. The fair value of the bonds at December 31, 2020, was $202,500. d. Indicate the effects of this investment on the 2020 income statement and year-end balance sheet. Round all amounts to the nearest whole dollar

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