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Wildhorse Company purchased, on January 1, 2025, as an available-for-sale security, $87,000 of the 10%, 5-year bonds of Handley Corporation for $80,728, which provides an 12% return. Prepare Wildhorse'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 $82,650. 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.) Date 2025 er 31, 2025 31, 2025 Account Titles and Explanation Debt Investments Cash Cash Debt Investments Interest Revenue Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Debit 69166 5250 975 1109 Credit DOOOOOO 69166 6225 1109

Wildhorse Company purchased, on January 1, 2025, as an available-for-sale security, $87,000 of the 10%, 5-year bonds of Handley Corporation for $80,728, which provides an 12% return. Prepare Wildhorse'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 $82,650. 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.) Date 2025 er 31, 2025 31, 2025 Account Titles and Explanation Debt Investments Cash Cash Debt Investments Interest Revenue Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Debit 69166 5250 975 1109 Credit DOOOOOO 69166 6225 1109

FINANCIAL ACCOUNTING
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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Wildhorse Company purchased, on January 1, 2025, as an available-for-sale security, $87,000 of the 10%, 5-year bonds of Handley Corporation for $80,728, which provides an 12% return. Prepare Wildhorse'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 $82,650. 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.) Date 2025 er 31, 2025 31, 2025 Account Titles and Explanation Debt Investments Cash Cash Debt Investments Interest Revenue Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Debit 69166 5250 975 1109 Credit DOOOOOO 69166 6225 1109
Transcribed Image Text:Wildhorse Company purchased, on January 1, 2025, as an available-for-sale security, $87,000 of the 10%, 5-year bonds of Handley Corporation for $80,728, which provides an 12% return. Prepare Wildhorse'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 $82,650. 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.) Date 2025 er 31, 2025 31, 2025 Account Titles and Explanation Debt Investments Cash Cash Debt Investments Interest Revenue Fair Value Adjustment Unrealized Holding Gain or Loss - Equity Debit 69166 5250 975 1109 Credit DOOOOOO 69166 6225 1109
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