Question#$01$:

On January $1,2013,$ THD Company purchased $12\%$ bonds having a maturity value of Tk$.$

$300,000.$ The bonds provide the bondholders with a $10\%$ yield. They are dated January $1,2013,$

and mature January $1,2018,$ with interest receivable December $31$ of each year. THD Company

uses the effective$-$interest method to allocate unamortized discount or premium. The securities

are classified as available$-$for$-$sale. The fair value of the bonds at December $31$ of each year$-$end

is as follows.

$2013-$ TK$320500$

$2014-$ TK $309000$

$2015-$ TK$308000$

$2016-$ TK $310000$

$2017-$ TK$300,000$

Required:

$($a$)$ Indicate whether the bonds were purchased at a discount or at a premium.

$($b$)$ Prepare the journal entry at the date of the bond purchase.

$($c$)$ Prepare the journal entries to record the interest received for $2013.$

$($d$)$ Prepare the adjusting entry to record the bonds at fair value at December $31,2013.$ The

Fair Value Adjustment account has a debit balance of Tk$.1,000$ prior to adjustment

$($e$)$ Prepare the journal entry to record the recognition of fair value for $2014$