1. Prepare the fair value adjusting entry for Swift Enterprise as of 12/31/20. Show your work.

2. Show or describe exactly and specifically what will appear on the Balance Sheet of Swift Enterprise as of 12/31/20, related to these bonds.

3. Show or describe exactly and specifically what will appear on the Income Statement of Swift Enterprise for the year ending 12/31/20.

4. Prepare the journal entries Swift Enterprise should make on the following dates related to this investment. Assume that the fair value of these bonds is $735,000 at 12/31/21. Show your work.

6/30/21:

12/31/21:

5. Assume Swift sells these bonds on 4/1/22 for $782,000. Prepare all journal entries required on 4/1/22. Show your work.

Accrue interest as of 4/1/22:

Adjust to fair value as of 4/1/22:

Reclassification entry as of 4/1/22:

Record the sale of the investment on 4/1/22:

On January 1, 2020, Lizzo Construction sold $750,000 of 6% bonds to Swift Enterprise. The bonds mature on December 31, 2024 (4 years). For bonds of similar risk and maturity, the market yield was 8%. Interest is paid semiannually on June 30 and December 31. Swift Enterprise purchased the bonds as an investment and plans to hold the bonds for approximately 2 years. The fair value of the bonds at 12/31/20 was $850,000. Swift's fiscal year end is December 31 and 2020 was its first year of business.