On July 1 of the current year, West Company purchased for cash, 18, $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as AFS securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Note: When answering the following questions, round each amount to the nearest whole dollar. a. Prepare a bond amortization schedule for the current year and the following year using the effective interest method. Date Stated Interest Jul 1. Year 1 Jan. 1. Year 2 $ Jul 1. Year 2 Market Discount Bond Interest Amortization Amortized Cost 5 175.429 x * 8.771 $ 671 176.100 x 8,805 705 176.805 x 8,100 $ 8,100 6. Record the entry for the purchase of the bonds by West Company on July 1. Credit Date Account Name Jul 1, Year 1 Investment in AFS Securities Cash Debit 180.000 0 X 0 180,000 x To record purchase of bonds c. Record the adjusting entries by West Company on December 31 to accrue interest revenue and adjust the investment to fair value. The fair value of the bonds at December 31 was $182,250. Credit V Debit 671 8.100 0 V OX 0 8.771 x Date Account Name Dec. 31. Year 1 Fair Value Adjustment-AFS Interest Receivable Interest Revenue To accrue interest revenue. Dec 31 Year 1 Investment in AFS Securities Unrealized Gain or Loss-Income To ad ust investment to fair value. 2.250 0 0 x 2.250 X d. Indicate the effects of this investment on the income statement for the year and year-end balance sheet. Ignore cash. Note: Do not use a negative sign for an account with a normal balance. Income Statement Other Revenues and Gains Interest revenue s 8.771 Balance Sheet, December 31 Assets Interest receivable $ Investment in AFS Securities $ Stockholders Equity Accumulated other comprehensive income $ 8,100 182.250 2.250 X