Record the adjusting entries by west company on december

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On July 1, 2020, West Company purchased for cash, seventeen $10,000 bonds of North Corporation at a market rate of 6%. The bonds pay 5% interest, payable on a semiannual basis each July 1 and January 1, and mature on July 1, 2023. The bonds are classified as trading securities. The annual reporting period ends December 31. Assume the effective interest method of amortization of any discounts or premiums. Ignore income taxes.

Problem 1: Record the entry for the purchase of the bonds by West Company on July 1, 2020.

Problem 2: Record the adjusting entries by West Company on December 31, 2020 to accrue interest revenue and record the unrealized gain or loss. The fair value of the bonds on December 31, 2020, was $174,300.

Reference no: EM132761850

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