Problem
On November 30, 2015, Jordan Inc. purchased a $300,000 5-year bond with a 3% stated interest rate from the issuer. Given the yield on the bond was 2%, Jordan paid $314,140.38 for the bond.
Interest is paid annually on November 30. Jordan uses the fair value through net income (FV-NI) model to account for this investment. At December 31, 2015, the fair value of the bond was $313,000, and at December 31, 2016, the fair value was $312,000. Jordan has an accounting policy of recognizing interest earned separately from fair value adjustments.
Required (Round to the nearest cent.):
Prepare the journal entries required for this investment for 2015.
Prepare the journal entries required for this investment for 2016.
Assuming the investment is sold on March 31, 2017 for $310,000 plus accrued interest, prepare the journal entries required for this investment in 2017.