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Prepare the necessary adjusting entry

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Question - On January 1, 2020, Coronado Company purchased $410,000, 8% bonds of Aguirre Co. for $378,339. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Coronado Company uses the effective-interest method to amortize discount or premium. On January 1, 2022, Coronado Company sold the bonds for $380,070 after receiving interest to meet its liquidity needs.

If the fair value of Aguirre bonds is $382,070 on December 31, 2021, prepare the necessary adjusting entry.

Reference no: EM132555874

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