(Answered) Question - below is a bond investment amortization schedule

Accounting

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.

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