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 0 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 DOOD! 5250 975 1109 Credit 69166 00000 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 0 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 DOOD! 5250 975 1109 Credit 69166 00000 6225 1109
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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