( A vailable-fo r -Sale and Held-to-Maturity Debt Securities Entries) The following information relates to the debt securities investments of Wildcat Company.
1. On February 1, the company purchased 10% bonds of Gibbons Co. having a par value of $300,000 at 100 plus accrued interest. Interest is payable April 1 and October 1.
2. On April 1, semiannual inte r est is r eceived.
3. On July 1, 9% bonds of Sampson, Inc. we r e pu r chased. These bonds with a par value of $200,000
we r e pu r chased at 100 plus acc r ued inte r est. Inte r est dates a r e June 1 and December 1.
4. On September 1, bonds with a par value of $60,000, pu r chased on Feb r uary 1, a r e sold at 99 plus
acc r ued inte r est.
5. On October 1, semiannual inte r est is r eceived.
6. On December 1, semiannual inte r est is r eceived.
7. O n Decembe r 31 , th e fai r valu e o f th e bond s pu r chase d Feb r uar y 1 an d Jul y 1 a r e 9 5 an d 93 , r espectivel y .
(a) Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities.
(b) If Wildcat classified these as held-to-maturity investments, explain how the journal entries would differ from those in part (a).
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