Colah Company purchased $1,200,000 of Jackson, Incorporated, 8% bonds at par on July 1, 2024, with interest paid semi-annually. Colah determined that it should account for the bonds as an available-for-sale investment. At December 31, 2024, the Jackson bonds had a fair value of $1,420,000. Colah sold the Jackson bonds on July 1, 2025 for $1,080,000.
Required:
1. Prepare Colah's journal entries for the following transactions:
a. The purchase of the Jackson bonds on July 1.
b. Interest revenue for the last half of 2024.
c. Any year-end 2024 adjusting entries.
d. Interest revenue for the first half of 2025.
e. Any entries necessary upon sale of the Jackson bonds on July 1, 2025, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.
2. Complete the following table to show the effect of the Jackson bonds on Colah's net income, other comprehensive income, and comprehensive income for 2024, 2025, and cumulatively over 2024 and 2025.
Complete this question by entering your answers in the table below.
Required 1
Required 2
Prepare Colah's journal entries for the following transactions:
a. The purchase of the Jackson bonds on July 1.
b. Interest revenue for the last half of 2024.
c. Any year-end 2024 adjusting entries.
d. Interest revenue for the first half of 2025.
e. Any entries necessary upon sale of the Jackson bonds on July 1, 2025, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars, and not in millions.
