Question - Below is a bond investment amortization schedule with related fair value information. The bonds are classified as trading.
Amortized cost Fair Value
7/31/17 $491,150 $497,000
7/31/18 $519,442 $500,000
7/31/19 $550,000 $550,000
a) Indicate whether the bonds were purchased at discount or a premium
b) Prepare the adjusting entry to record the bonds at fair value at 7/31/17. The Fair Value adjustment account has a credit balance of $1,000 prior to adjustment
c) Prepare the adjusting entry to record the bonds at fair value at 7/31/18.