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On July 1 of Year 1, West Company purchased for cash, 18, $10,000 bonds of...

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Accounting

On July 1 of Year 1, West Company purchased for cash, 18, $10,000 bonds of North Corporation to yield 10%. The bonds pay 9% interest, payable on a semiannual basis each July 1 and January 1, and mature in three years on July 1. The bonds are classified as AFS securities. West Company's annual reporting period ends December 31. Assume the effective interest method of amortization of any discount or premium. Record the sale, eliminating the associated Fair Value Adjustment account balance in one entry. For simplicity, ignore any fair value adjustments in Year 2 related to the 16 remaining bonds.

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