The preparation of the related journal entries for each period for ABC Co. is as follows:
<h3>Journal Entries:</h3>
2001/12/31 Debit Bonds Receivable $100,000
Debit Bonds Premium $2,723
Credit Cash $102,723
2002/12/31 Debit Cash $6,000
Credit Interest Revenue $5,136
Credit Amortization of Bonds Premium $864
2003/12/31 Debit Cash $6,000
Credit Interest Revenue $5,093
Credit Amortization of Bonds Premium $907
2004/9/30 Debit Cash $105,500
Credit Interest Revenue $3,786
Credit Amortization of Bonds Premium $952
Credit Bonds Receivable $100,000
Credit Realized Gain $762
<h3>Data and Calculations:</h3>
Periods Cash Interest Revenue Premium Carrying Value
Receipt Amortization
2001/12/31 102,723
2002/12/31 6,000 5,136 864 101,859
2003/12/31 6,000 5,093 907 100,952
2004/12/31 6,000 5,048 952 100,000
The fair market value of the bonds:
Periods Fair Market Value
2002/12/31 104,200
2003/12/31 103,000
2004/9/30 105,500
<h3>Journal Entries Analysis:</h3>
2001/12/31 Bonds Receivable $100,000 Bonds Premium $2,723 Cash $102,723
2002/12/31 Cash $6,000 Interest Revenue $5,136 Amortization of Bonds Premium $864
2003/12/31 Cash $6,000 Interest Revenue $5,093 Amortization of Bonds Premium $907
2004/9/30 Cash $105,500 Interest Revenue $3,786 Amortization of Bonds Premium $952 Bonds Receivable $100,000 Realized Gain $762
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