On January 1, Year 1 Alcorn Corporation Purchased $95,000 of 9

question 142

Essay

On January 1, Year 1 Alcorn Corporation purchased $95,000 of 9% bonds at face value. The bonds are classified as a held-to-maturity investment. The bonds pay interest semiannually on January 1 and July 1. On December 31, Year 1, the fair value of the bonds is $98,000. Alcorn's fiscal year ends on December 31.
Required:
1. Prepare the journal entries to record the acquisition of the bonds and the first two interest payments. Include any year-end adjusting entries.
2. If the bonds were classified as an available for sale security, what additional adjusting entry would be made on December 31?

---

Definitions:

Institutions

Structures or mechanisms of social order and cooperation governing the behavior of a set of individuals within a given human colony.

Nursing Home

A residential facility for elderly or disabled people who require constant care and medical attention.

Opportunity

A favorable circumstance or chance that makes it possible to do or achieve something.

Residents

Individuals who live in a particular locality or housing, forming part of a community or population in that area.