Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semiannually. Colah determined that it should account for the bonds as an available-for-sale investment. At December31, 2018, the Jackson bonds had a fair value of $1.2 million. Colah sold the Jackson bonds on July 1, 2019 for$900,000.Required:1. Prepare Colah’s journal entries to record:a. The purchase of the Jackson bonds on July 1b. Interest revenue for the last half of 2018c. Any year-end 2018 adjusting entriesd. Interest revenue for the first half of 2019e. Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-valueadjustment, recording any reclassification adjustment, and recording the sale

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Colah Company purchased $1 million of Jackson, Inc., 5% bonds at par on July 1, 2018, with interest paid semiannually. Colah determined that it should account for the bonds as an available-for-sale investment. At December
31, 2018, the Jackson bonds had a fair value of $1.2 million. Colah sold the Jackson bonds on July 1, 2019 for
$900,000.
Required:
1. Prepare Colah’s journal entries to record:
a. The purchase of the Jackson bonds on July 1
b. Interest revenue for the last half of 2018
c. Any year-end 2018 adjusting entries
d. Interest revenue for the first half of 2019
e. Any entries necessary upon sale of the Jackson bonds on July 1, 2019, including updating the fair-value
adjustment, recording any reclassification adjustment, and recording the sale

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