On December 31, 2019, Sumner Company held Wall Company bonds inits portfolio of trading securities. The bonds have a par value of$40,000, carry a 10% annual interest rate, mature in 2026, and hadoriginally been purchased at par. The market value of the bonds onDecember 31, 2019 was $38,000.

On January 1, 2020, Sumner acquired bonds of Doherty Companywith a par value of $30,000 for $30,200. The Doherty Company bondscarry an annual interest rate of 12% and mature on December 31,2024. Additionally, on the same date, Sumner acquired MaggioCompany bonds with a face value of $20,000 for $19,500. The MaggioCompany bonds carry an 8% annual interest rate and mature onDecember 31, 2029. At the end of 2020, the respective market valuesof the bonds were: Wall, $39,000; Doherty, $31,000; and Maggio,$21,000. Sumner classifies all of the debt securities as trading.Assume that Sumner uses the straight-line method to amortize anydiscounts or premiums.

Required:

1.	Prepare the journal entries necessary to record the purchase ofthe investments on January 1, 2020, the annual interest payments onDecember 31, 2020, and the adjusting entry needed on December 31,2020.
2.	What would Sumner disclose on its December 31, 2020, balancesheet related to these investments?