Business, 18.03.2020 00:52 minnie7760

Pharoah Company invests $10,400,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $11,078,000. Interest is paid on January 1.Required:
1. Prepare journal entries for Pharoah Company to (a) record the transactions related to these bonds in 2017, assuming Pharoah does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Pharoah Company elects the fair value option to account for these bonds.

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Pharoah Company invests $10,400,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bon...