Blossom Company purchased, on January 1, 2025, as an available-for-sale security, $88,000 of the 12%, 5-year bonds of Richetti Corporation for $81,958, which provides an 14% return. Prepare Blossom's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $83,600. Assume effective-interest amortization is used. (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 O for the amounts. Round answers to O decimal places, e.g. 1,225.) e Account Titles and Explanation Debit Credit 15 Debt Investments Cash L, 2025 Cash Debt Investments Interest Revenue 2025 Fair Value Adjustment Unrealized Holding Gain or Loss - Equity 81958 10560 914 1642 81958 11474 1642
Blossom Company purchased, on January 1, 2025, as an available-for-sale security, $88,000 of the 12%, 5-year bonds of Richetti Corporation for $81,958, which provides an 14% return. Prepare Blossom's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $83,600. Assume effective-interest amortization is used. (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 O for the amounts. Round answers to O decimal places, e.g. 1,225.) e Account Titles and Explanation Debit Credit 15 Debt Investments Cash L, 2025 Cash Debt Investments Interest Revenue 2025 Fair Value Adjustment Unrealized Holding Gain or Loss - Equity 81958 10560 914 1642 81958 11474 1642
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blossom Company purchased, on January 1, 2025, as an available-for-sale security, $88,000 of the 12%, 5-year bonds of Richetti
Corporation for $81,958, which provides an 14% return.
Prepare Blossom's journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization,
and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end
fair value of $83,600. Assume effective-interest amortization is used. (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 O for the amounts. Round answers to O decimal places, e.g. 1,225.)
e
Account Titles and Explanation
Debit
Credit
15
Debt Investments
Cash
L, 2025
Cash
Debt Investments
Interest Revenue
2025
Fair Value Adjustment
Unrealized Holding Gain or Loss - Equity
81958
10560
914
1642
81958
11474
1642
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