Sam Company purchased $1,200,000 of 8%, 5-year bonds from Mike, Inc. on January 1, 2020, with interest payable on December 31. The bonds sold for $1,300,000 at an effective interest rate of 7%. Sam uses the effective interest method and accounts for the bonds using the Available-for-Sale Method.

At December 31, 2020, the fair value of the Mike, Inc. bonds was $1,250,000.

Required:

A. Record the necessary entries for Sams bond investment account in 2020? Round to the nearest dollar.

B. What is the net amount on Sams balance sheet for this debt investment at the end of 2020?