Prepare journal entries to record these transactions

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Question - Reporting of and Analyzing Financial Effects of Available-for-sale (Debt) Securities Hartgraves Company had the following transactions and adjustments related to a bond investment. Assume that when the bond was purchased, management did not intend to sell them in the near future. 2018 Oct. 1 Purchased $500,000 face value of Skyline, Inc.'s 7% bonds at 97 plus a brokerage commission of $1,000. The bonds pay interest on September 30 and March 31 and mature in 20 years. Hartgraves Company expects to sell the bonds in the near future. Dec. 31 Made the adjusting entry to record interest earned on investment in the Skyline bonds. Dec. 31 Made the adjusting entry to record the current fair value of the Skyline bonds. At December 31, 2018, the fair value of the Skyline bonds was $490,000. 2019 Mar. 31 Received the semiannual interest payment on investment in the Skyline bonds. Apr. 1 Sold the Skyline bond investment for $492,300 cash.

a. Prepare journal entries to record these transactions.

b. Post the journal entries from a to their respective T-accounts. c. Record each of the transactions in the financial statement effects template.

Reference no: EM133055571

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