No.DateAccount Titles and ExplanationDebitCredit(a)(b)(To record interest received)(To record fair value adjustment)(c) On January 1, 2020, Splish Company purchased 5% bonds, having a maturity value of $ 440,000 for $ 377,465. The bonds provide thebondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2027, with interest paid on June 30 andDecember 31 of each year. Splish Company uses the effective-interest method to allocate unamortized discount or premium. Thebonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.2020$ 378,0002023$ 398,0002021$373,0002024$ 418,0002022$ 368,000(a)Prepare the journal entry at the date of the bond purchase.(b)Prepare the journal entries to record the interest revenue and recognition of fair value for 2020.(c)Prepare the journal entry to record the recognition of fair value for 2021.(Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indentmanually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

The question is based on the concept of Financial Accounting.

Answered: On January 1, 2020, Splish Company…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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