P1. On January 1, 2015, BROWN Company purchased 7%, 10-year bonds with a face value of $2,000,000 at $1,800,000. The interests will be paid annually on December 31. BROWN uses the straight-line method to amortize the discount on bonds and the calendar year for its fiscal period. The fair market values of the bonds were $1,900,000 on 12/31/2015 and $1,890,000 on 12/31/2016. BROWN sold the bonds for $1,990,000 on 1/1/2017.
Instructions: Presume that BROWN classified the bond investments as available for sales security. Prepare any necessary journal entries
a. for the acquisition of the bonds on 1-1-2015.
b. the receipt of interest and premium amortization on 12/31/2015 and 12/31/2016.
c. any unrealized holding gain or loss as of 12/31/2015 and 12/31/2016
d. the sales of the bond investment on 1/1/2017