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

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 3MC: On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9%...

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Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.
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