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Prepare the adjusting entry to record bonds at fair value

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Question - Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are classified as available-for-sale.

 

12/31/20

12/31/21

12/31/22

Amortized cost

$523,000

$571,500

$590,000

Fair value

$528,300

$561,300

$590,000

Required -

(a) Indicate whether the bonds were purchased at a discount or at a premium.

(b) Prepare the adjusting entry to record the bonds at fair value at December 31, 2020. The Fair Value Adjustment account has a debit balance of $1,000 prior to adjustment.

(c) Prepare the adjusting entry to record the bonds at fair value at December 31, 2021.

Reference no: EM132735559

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