- 4 On January 1 2020 Novotna Company Purchased 500 000 6 Bonds Of Aguirre Co For 473 787 The Bonds Were Purchase 1 (35.85 KiB) Viewed 28 times
4. On January 1, 2020, Novotna
Company purchased $500,000, 6% bonds of Aguirre Co. for $473,787. The bonds were purchased to yield 8% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2023. Novotna
Company uses the effective-interest method to amortize discount or premium. On July 1, 2022, Novotna
Company sold the bonds for $497,000 after receiving interest to meet its liquidity needs. If the fair value of Aguirre bonds is $450,000 on December 31, 2021, prepare the necessary adjusting entry. (Assume the fair value adjustment balance on December 31, 2020, is a credit of $3,000.) (15 pts)