Orchard Company had the following transactions relating to its investments:
(a) Grape’s bonds
On January 1, 2020, Orchard acquired a $100,000, 5%, five-year corporate bond issued by Grape Limited for cash. The bond was dated January 1, 2020 with interest paid semi-annually on January 1 and July 1. The market rate of interest was 8% at the time of purchase. The purchase of bonds was to
park idle cash until it matures. All interests for 2020 were paid on time. On December 31, 2020, the market interest rate was 6.5%. On April 1, 2021, all the bonds were sold at 101 plus accrued interest.

(b) Papaya’s bonds
On April 1, 2020, Orchard acquired a $200,000, 6%, eight-year corporate bond issued by Papaya Limited for cash. The bond was dated January 1, 2020, with interest paid semi-annually on January 1 and July 1. Because the market rate of interest was 4% on that date, the issue price for the bond was
$228,637 plus interest for the three months from 1 January to March 31, 2020. The bonds were classified as held-for-collection-and-sale by Orchard and had a fair value of $210,000 plus accrued interest on December 31, 2020. All interests for 2020 were paid in full on time.
In 2021, market interest rates increased to 6%, thus causing further drop in Papaya’s bonds. Alongside, Papaya Limited faced a downturn of sales and its debt financing ability had seriously deteriorated. Debt restructuring by Papaya was initiated and Orchard has revised the projected semi-annual coupon payments by Papaya from $6,000 to $5,000, starting with payment of July 1, 2022. Redemption payment remained unchanged. Impacts of all the aforesaid changes were reflected in the value of Papaya’s bonds on December 31, 2021. All interests for 2021 were paid in full on time. On January 1, 2022, all the Papaya’s bonds were sold for cash at $195,000.

(c) Coconut’s shares
On July 1, 2020, Orchard acquired 6,000 shares of Coconut Limited at a price of $25 per share for cash. The shares are classified as non-trading by Orchard. On December 31, 2020, dividends of $1.50 per share were declared with an expected date of payment of January 15, 2021. On December 31,
2020, the fair value of the Coconut shares had increased to $28 per share. On December 31, 2021, the fair value of the Coconut shares had decreased to $26 per share, and all the shares were sold for cash on that day.

(d) Cherry’s shares
On March 31, 2020, Orchard acquired 1,500 shares of Cherry Limited at a price of $1,000 per share for cash. On May 15, 2020, Orchard acquired another 50 Cherry’s shares at $1,200 per share for cash. The shares are classified as trading by Orchard. On July 18, 2020, dividends of $50 per share were
received. On September 1, 2020, Orchard sold 10 Cherry shares for cash at $1,300 per share. On December 31, 2020, the total fair value of the Cherry shares had increased to $1,650,000.

e) Farmer Corporation
On July 1, 2020, Orchard purchased 45,000 shares being 20% of the outstanding shares of Farmer
Limited at a price of $15 per share. On December 31, 2020, the fair value of the Farmer's shares had increased to $19 per share. The farmer had a net income of $600,000 for the six months ending this date and declared and paid total dividends of $10,000 to its shareholders.

Required:
Prepare necessary journal entries for each category of investment to record the abovementioned transactions, and fair value adjustments if applicable, in the relevant years. Present your answers for each item of investment separately, arranged from (a) to (e) as in the question. Where appropriate, record fair value adjustments of share investments in one account, and those of bond investments in another account.
Notes:
For all journal entries with gain or loss items, indicate whether the item should be recorded as income (i.e. “XXX – Income”) or equity (i.e. “XXX – Equity”). Items without such indications will be regarded as incorrect.
Show all figures in dollars, and round off the numbers in your answers to the nearest dollar.