Item 3Item 3 On January 1, 2018, Hoosier Company purchased $922,000 of 10% bonds at face value. The bond market value was $976,000 on December 31, 2018. Required: Prepare the appropriate journal entry on December 31, 2018, to properly value the bonds assuming the bonds are classified as

Note: The missing last part of the question is as follows

"(1.) Trading securities.

(2.) Securities available for sale.

(3.) Held-to-maturity securities"

Solution

1.  Journal Entries - Hoosier Company

Date             Particulars                     Debit             Credit

31-Dec-18   Fair value adjustment    $54,000

                  To Unrealized holding                          $54,000

                  gain or loss - NI

                 (To adjust bond investment held for trading to fair value)

2. Journal Entries - Hoosier Company

Date             Particulars                     Debit             Credit

31-Dec-18     Fair value adjustment  $54,000

                    To Unrealized holding                       $50,000

                    gain or loss - OCI

                  (To adjust bond investment available for sale to fair value)  

3. Journal Entries - Hoosier Company

Date             Particulars                     Debit             Credit

31-Dec-18     No Journal Entry Required  

it is a i took the test.