Recording Entries for AFS Debt Securities Effective Interest Method Adjust FVA at Sale and Year-End On July 1, 2020, West Company purchased for cash, sixteen $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 on July 1, 2023. The bonds are classified as AFS securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Amortization Schedule Journal Entries and FS Presentation for 2020 Journal Entries for 2021 a. Prepare a bond amortization schedule for 2020 and 2021 using the effective interest method. Note:Round each amount to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Market Interest Date Stated Interest July 1, 2020 Jan. 1, 2021 $ July 1, 2021 Discount Bond Amortization Amortized Cost $ $ $ Amortization Schedule Journal Entries and FS Presentation for 2020 Journal Entries for 2021 b. Record the entry for the purchase of the bonds by West Company on July 1, 2020. c. Record the adjusting entries by West Company on December 31, 2020, to accrue interest revenue and adjust the investment to fair value. The fair value of the bonds at December 31, 2020, was $162,000 Note: List multiple debits or credits (when applicable in alphabetical order. Note: Round e the rounded amount for later calculations in the schedule. . Cash Date Interest Receivable Dr. Cr Investment in TS 6. July 1, 2020 0 0 Fair Value Adjustment--TS 0 Investment in AFS Securities C. Dec. 31. 2020 Fair Value Adjustment--AFS 0 Investment in HTM Securities 0 0 Investment in Stock 0 0 Fair value Adjustment--Equity Securities Fair Value Adjustment--Fair Value Option Dec 31, 2020 0 Allowance for Credit Losses 0 Accumulated Other Comprehensive Income 11 C 0 Unrealized Gain or Loss--OCI Unrealized Gain or Loss--Income Dividend Revenue d. Indicate the e Interest Revenue statement and year-end balance sheet. Investment Income Note: List acc Loss on Impairment Note: Do not Recovery of Loss on Impairment rmal balance. Loss on Sale of Investment Inc Gain on Sale of Investment N/A Other revenues all Interest Revenue 0 Balance Sheet, December 31 2020 Assets Investment in Stock 0 Fair Value Adjustment--Fair Value Option 0 Stockholders' Equity Accumulated Other Comprehensive Income $ 0 Amortization Schedule Journal Entries and FS Presentation for 2020 Journal Entries for 2021 e. Record the receipt of interest on January 1, 2021. Date Account Name Jan 1, 2021 Dr. Cr. 0 0 0 0 f. After the interest receipt on July 1, 2021, four of the bonds were sold for $38,600 cash. (1) Record the receipt of interest on July 1, 2021. (2) Record the entry to adjust the two bonds to fair value (FV-OCI). (3) Record the sale, eliminating the associated Fair Value Adjustment account balance. For simplicity, ignore any fair value adjustments in 2021 related to the six remaining bonds. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round each amount to the nearest whole dollar. Account Name Dr. Cr. Date (1) July 1, 2021 0 0 + 0 0 0 0 To record receipt of interest. (2) July 1, 2021 0 0 0 0 To adjust to fair value investments to be sold, (3) July 1, 2021 0 0 D 0 0 0 0 0 To record sale of investments. Please answer all parts of the