Schedule of Interest Revenue and Bond Discount Amortization-Effective-Interest Method 10% Bonds Purchased to Yield 12% $ 21000 $23345 $ Bond Carrying Amount of Bonds $ 21000 23486 2486 \begin{tabular}{|} 393917 \\ \hline \end{tabular} 21000 23635 2635 396552 21000 23793 2793 399345 21000 23961 2961 402306 21000 24138 3138 405444 21000 24327 3327 408771 21000 24526 3526 412297 21000 24738 3738 416035 5 21000 23486 \begin{tabular}{|} 2486 \\ \hline \end{tabular} \begin{tabular}{|} 393917 \\ \hline \end{tabular} 5 21000 23635 2635 7 21000 23793 2793 396552 7 21000 23961 2961 399345 3 21000 24138 3138 402306 3 21000 24327 3327 405444 7 21000 24526 3526 408771 7 21000 24738 3738 416035 J 419997 eTextbook and Media (c) Prepare the journal entries to record the semiannual interest on July 1, 2025, and December 31, 2025. (d) If the fair value of Aguirre bonds is $392,653 on December 31, 2026, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31,2025 , is a debit of $3,481.) (e) Prepare the journal entry to record the sale of the bonds on January 1, 2027. (List all debit entries before credit entries. Credit account titles are automatically indented when 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, e.g. 1,225. Record journal entries in the order presented in the problem.) On January 1, 2025, Martinez Company purchased $420,000,10% bonds of Aguirre Co. for $389,086. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1 . The bonds mature on January 1, 2030. Martinez Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Martinez Company sold the bonds for $390,653 after receiving interest to meet its liquidity needs. (a) Your answer is correct. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debt Investments Interest Revenue Dec. 31,2026 Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Jan. 1, 2027 Debt Investments Cash Schedule of Interest Revenue and Bond Discount Amortization-Effective-Interest Method 10% Bonds Purchased to Yield 12% $ 21000 $23345 $ Bond Carrying Amount of Bonds $ 21000 23486 2486 \begin{tabular}{|} 393917 \\ \hline \end{tabular} 21000 23635 2635 396552 21000 23793 2793 399345 21000 23961 2961 402306 21000 24138 3138 405444 21000 24327 3327 408771 21000 24526 3526 412297 21000 24738 3738 416035 5 21000 23486 \begin{tabular}{|} 2486 \\ \hline \end{tabular} \begin{tabular}{|} 393917 \\ \hline \end{tabular} 5 21000 23635 2635 7 21000 23793 2793 396552 7 21000 23961 2961 399345 3 21000 24138 3138 402306 3 21000 24327 3327 405444 7 21000 24526 3526 408771 7 21000 24738 3738 416035 J 419997 eTextbook and Media (c) Prepare the journal entries to record the semiannual interest on July 1, 2025, and December 31, 2025. (d) If the fair value of Aguirre bonds is $392,653 on December 31, 2026, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31,2025 , is a debit of $3,481.) (e) Prepare the journal entry to record the sale of the bonds on January 1, 2027. (List all debit entries before credit entries. Credit account titles are automatically indented when 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, e.g. 1,225. Record journal entries in the order presented in the problem.) On January 1, 2025, Martinez Company purchased $420,000,10% bonds of Aguirre Co. for $389,086. The bonds were purchased to yield 12% interest. Interest is payable semiannually on July 1 and January 1 . The bonds mature on January 1, 2030. Martinez Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Martinez Company sold the bonds for $390,653 after receiving interest to meet its liquidity needs. (a) Your answer is correct. Prepare the journal entry to record the purchase of bonds on January 1. Assume that the bonds are classified as available-for-sale. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debt Investments Interest Revenue Dec. 31,2026 Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Jan. 1, 2027 Debt Investments Cash