Question 4 View Policies Current Attempt in Progress On January 1, 2020, Martinez Company purchased $376,000 worth of 8% bonds of Aguirre Co for $346,966. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on July 1 and January 1. The bonds mature on January 1, 2025 Martinez Company uses the effective interest method to amortize the discount or premium On January 1, 2022, to meet its liquidity needs, Martinez Company sold the bonds for $348,482, after receiving interest Prepare the journal entry to record the purchase of bonds on January 1 Assume that the bonds are classified as FV.OCI (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, 0.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 e Textbook and Media Prepare the amortization schedule for the bonds (Round answers to 0 decimal places, e.g. 5,275.) Schedule of Interest Revenue and Bond Discount Amortization-Effective Interest Method Interest Receivable Or Cash Received Interest Revenue Bond Discount Amortization Carrying Amount of Bonds Date 1/1/20 $ 7/1/20 $ $ $ 12/31/20 7/1/21 12/3121 7/1/22 12/3122 7/123 12/3123 7/1/24 12/31/24 Prepare the journal entries to record the semi-annual interest on July 1, 2020, and December 31, 2020. (Credit account titles are automatically indented when the amount is ontored. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit July 1 Dec. 31 I e Textbook and Media List of Accounts Assuming the fair value of Aguirre bonds is $350,362 on December 31, 2021, prepare the necessary adjusting entry (Assume that the fair value adjustment on December 31, 2020 was a debit of S3 173.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Dec. 31 e Textbook and Media List of Accounts Prepare the journal entry to record the sale of the bonds on January 2022 including reclassifying holding gains or losses to net Prepare the journal entry to record the sale of the bonds on January 1, 2022, including reclassifying holding gains or losses to net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To adjust to fair value at date of disposal) Jan. 1 (To record disposal) Jan. 1 (To reclassify holding loss) e Textbook and Media List of Accounts
