Question 5 Partially correct Mark 78.00 out of 104.00 P Flag question Edit question Reporting of and Analyzing Financial Effects of Available-for-sale (Debt) Securities Hartgraves Company had the following transactions and adjustments related to a bond investment. Assume that when the bond was purchased, management did not intend to sell them in the near future. 2018 Oct. 1 Purchased $500,000 face value of Skyline, Inc.'s 7% bonds at 97 plus a brokerage commission of $1,000. The bonds pay interest on September 30 and March 31 and mature in 20 years. Hartgraves Company expects to sell the bonds in the near future. Dec 31 Made the adjusting entry to record interest earned on investment in the Skyline bonds. Dec 31 Made the adjusting entry to record the current fair value of the Skyline bonds. At December 31, 2018, the fair value of the Skyline bonds was $490,000. 2019 Mar. 31 Received the semiannual interest payment on investment in the Skyline bonds. Apr. 1 Sold the Skyline bond investment for $492,300 cash. a. Prepare journal entries to record these transactions. b. Post the journal entries from a to their respective T-accounts. c. Record each of the transactions in the financial statement effects template. Journal Entries T-Accounts Financial statement effects template Date Credit Description Investment in Skyline, Inc. Cash Debit 486,000 1-Oct 0 486,000 31-Dec Interest receivable 8,750 0 0 8,750 4,000 0 Interest revenue To recognize interest earned. 31-Dec Investment in Skyline, Inc. Unrealized gain - AOCI To recognize change in fair value. 2019 0 4,000 31-Mar Cash 17,500 07 Interest receivable 0 8,750 Interest revenue 0 8,750 1-Apr Cash 492,300 0 0 X 2,300 X Unrealized gain - AOCI Investment in Skyline, Inc Investment in Skyline, Inc. X 0 490,000 X 0 490,000 Note: Enter answers in order of the transactions listed above using the first available answer box on the appropriate debit or credit side. Hint: Not every T-account will be used. Cash 17,500 492,300 486,000 0 Investment in Skyline Bonds 486,000 490,000 4,000 0 Interest Receivable 8,750 0 X 0 8,750 X Interest Revenue 0 8,750 0 8,750 Realized Gain Realized Loss 0 Unrealized Gain AOCI OX 4,000 Unrealized Loss AOCI 0 0 0 Ox 0 Unrealized Gain (Income) 0 0 Unrealized Loss (Income) 0 0