Question

Sarasota Company commonly issues long-term notes payable to its various lenders. Sarasota has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an annual basis). Sarasota has elected to use the fair value option for the long-term notes issued to Barclay's Bank and has the following data related to the carrying and fair value for these notes. Any changes in fair value are due to changes in market rates, not credit risk. December 31, 2020 December 31, 2021 December 31, 2022 Carrying Value Fair Value $56,000 $56,000 47,600 45,900 33,700 35,700 (a) Prepare the journal entry at December 31 (Sarasota's year-end) for 2020, 2021, and 2022, to record the fair value option for these notes. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts.Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer- a Journal Entry! I Date I particulary |Debit credit Dee 31 No entry - 2020 No entry Dee 31 | Noty payable Ale dr $1,700 2021 I (47,600 45,900) to unrealized Holding gain $1,700 I or loss income Dee 31 unrealized hording gain on the ar $3700 202d Tass income I TO Noly payable . $3700 (6) Note to be reported on sarosata's goki balance Sheet -$45,900 © Fair value Unrealized holding gain onors Chang in an realized! holding gaun url loss year Carrying ending value 2000 56000 2011 | 47,600 2022 33,700 55000 45,900 135,700 11700 1 2000 1700 (3700) ophion would result The effect of recording the fair value En unrealized holding loss of $3700