A company has investments in corporate bonds, classified as AFS and HTM. Information on these investments for 2020 is as follows:
•An AFS security with a coupon rate of 3% was purchased at a par value of $100,000 in a previous year. Interest is paid at the end of the year. The security has a $105,000 fair value at the beginning of 2020. At the end of 2020 its fair value is $70,000, and it is determined that the decline in value is due to expected credit losses.
•A 2-year bond is purchased at the beginning of 2020, at a price to yield 3%, classified as HTM. The bond has a face value of $1,000,000, coupon rate 4%, interest paid at the end of each year. At the end of 2020, the bond has a fair value of $400,000, and it is determined that the decline in value is a credit loss.
Required
Prepare the journal entries to record the events of 2020. Show your work clearly. Round to the nearest dollar if necessary.

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The Answer of A company has investments in corporate bonds, classified as AFS and HTM. Information on these investments for 2020 is as follows:
•An AFS security with a coupon rate of 3% was purchased at a par value of $100,000 in a previous year. Interest is paid at the end of the year. The security has a $105,000 fair value at the beginning of 2020. At the end of 2020 its fair value is $70,000, and it is determined that the decline in value is due to expected credit losses.
•A 2-year bond is purchased at the beginning of 2020, at a price to yield 3%, classified as HTM. The bond has a face value of $1,000,000, coupon rate 4%, interest paid at the end of each year. At the end of 2020, the bond has a fair value of $400,000, and it is determined that the decline in value is a credit loss.
Required
Prepare the journal entries to record the events of 2020. Show your work clearly. Round to the nearest dollar if necessary.

A Company Has Investments in Corporate Bonds, Classified as AFS