On July 1 of the current year, West Company purchased for cash, 8, $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 held-to-maturity securities. The annual reporting period ends December 31. Assume the straight-line interest method of amortization of any discount or premium.

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a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Jul. 1, Year 1 Jan. 1, Year 2 $ Jul. 1, Year 2 Market Discount Bond Interest Amortization Amortized Cost 77,970 3,899 * $ 299 X 78,269 X 3,913 x 313 x 78,582 X 3,600 $ 3,600 b. Record the entry for the purchase of the bonds by West Company on July 1. Debit Credit Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash 77,970 0 0 77,970 To record investment purchase. c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Credit Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Debit 299 3,600 0 x 0 0 3,899 X Interest Revenue To record year end adjusting entry. d. Indicate the effects of this investment on the current year's income statement and year-end balance sheet. Year 1 Income Statement Balance Sheet Other Revenues and Gains Dec. 31, Year 1 Interest revenue $ 3,899 X Assets Interest receivable $ Investment in HTM Securities $ 3,600 78,269 X e. Record the receipt of interest on January 1, Year 2. Credit Debit 3,600 0 Date Account Name Jan. 1, Year 2 Cash Interest Receivable To record interest received. 0 3,600 f. After the interest payment on July 1, Year 2, two of the bonds were sold for $19,300 cash. Provide the required entries on that date. Credit Date Account Name Jul. 1, Year 2 Investment in HTM Securities Cash Debit 313 3,600 0 x 0 0 3,913 X 0 Interest Revenue To record interest received. Jul. 1, Year 2 Cash Loss on Sale of Investment Investment in HTM Securities To record sale of bond. 19,300 346 0 x 0 19,646 x