Transactions for Bond (Held-to-Maturity) Investments Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, 20Y5. The following are bond (held-to-maturity) transactions by Rekya Mart Inc., which has a fiscal year ending on December 31: 20Υ5 Apr. 1. Purchased $36,000 of Smoke Bay 5%, 10-year bonds at their face amount plus accrued interest of $300. The bonds pay interest semiannually on February 1 and August 1. Purchased $114,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued Interest of $285. The bonds pay interest semiannually on May 1 and November 1. May 16. Aug. 1. Recelived semiannual interest on the Smoke Bay bonds. Sept. O 1. Nov. 1. Recelved semiannual interest on the Geotherma Co. bonds. Sold $14,400 of Smoke Bay bonds at 103 plus accrued interest of $60. Dec. 31 Accrued interest on the Smoke Bay bonds. Dec. 31 Accrued interest on the Geotherma Co. bonds. 20Y6 Feb. 1. Received semiannual interest on the Smoke Bay bonds. May 1. Receilved semiannual Interest on the Geotherma Co. bonds. Required: 1. Journalize the entries to record these transactions. If an amount box does not require an entry, leave it blank, Do not round vour intermediate calculations and round final answers to the nearest dollar. Use the nearest whole month for the interest period. Date Description Debit Credit |20Υ5 Apr. 1. Investments-Smoke Bay 36,00 Interest Receiva 300 Cash- 36,30 May 16. Investments-Geotherma Ci 114,0 Interest Receiva 285 Cash - 114,21 Aug. 1 Cash - 900 Interest Receiva- 300 Interest Reven 600 Sept. 1 Cash . 14,89 Interest Reven 60 - Gain on Sale of Inves- 432 Investments-Smoke Bay 14,40 Nov. 1. Cash Interest Receiva Interest Reven 36,00 Interest Receiva 300 Cash 36,30 May 16. Investments-Geotherma C 114,0 Interest Receiva 285 Cash 114,2 Aug. 1. Cash - 900 Interest Receiva 300 Interest Reven 600 Accounting numeric field Sept. 1. Cash 14,89 Interest Reven 60 Gain on Sale of Inves 432 Investments-Smoke Bay - 14,40 Nov, 1. Cash Interest Receiva Interest Reven Dec. 31 Smoke Bay Interest Receiva Interest Reven Dec. 31 Geotherma Co. Interest Receiva Interest Reven - 20Y6 Feb. 1 Cash - 540 Interest Receiva Interest Reven - May 1. Cash- Interest Receiva- Interest Reven- 2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure? If the bonds are classified as available-for-sale securities, then the portfolio of bonds would need to be adjusted to fair value . This would be recorded by using a valuation allowance account and an unrealized gain (- account.

Transactions for Bond (Held-to-Maturity) Investments Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, 20Y5. The following are bond (held-to-maturity) transactions by Rekya Mart Inc., which has a fiscal year ending on December 31: 20Υ5 Apr. 1. Purchased $36,000 of Smoke Bay 5%, 10-year bonds at their face amount plus accrued interest of $300. The bonds pay interest semiannually on February 1 and August 1. Purchased $114,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued Interest of $285. The bonds pay interest semiannually on May 1 and November 1. May 16. Aug. 1. Recelived semiannual interest on the Smoke Bay bonds. Sept. O 1. Nov. 1. Recelved semiannual interest on the Geotherma Co. bonds. Sold $14,400 of Smoke Bay bonds at 103 plus accrued interest of $60. Dec. 31 Accrued interest on the Smoke Bay bonds. Dec. 31 Accrued interest on the Geotherma Co. bonds. 20Y6 Feb. 1. Received semiannual interest on the Smoke Bay bonds. May 1. Receilved semiannual Interest on the Geotherma Co. bonds. Required: 1. Journalize the entries to record these transactions. If an amount box does not require an entry, leave it blank, Do not round vour intermediate calculations and round final answers to the nearest dollar. Use the nearest whole month for the interest period. Date Description Debit Credit |20Υ5 Apr. 1. Investments-Smoke Bay 36,00 Interest Receiva 300 Cash- 36,30 May 16. Investments-Geotherma Ci 114,0 Interest Receiva 285 Cash - 114,21 Aug. 1 Cash - 900 Interest Receiva- 300 Interest Reven 600 Sept. 1 Cash . 14,89 Interest Reven 60 - Gain on Sale of Inves- 432 Investments-Smoke Bay 14,40 Nov. 1. Cash Interest Receiva Interest Reven 36,00 Interest Receiva 300 Cash 36,30 May 16. Investments-Geotherma C 114,0 Interest Receiva 285 Cash 114,2 Aug. 1. Cash - 900 Interest Receiva 300 Interest Reven 600 Accounting numeric field Sept. 1. Cash 14,89 Interest Reven 60 Gain on Sale of Inves 432 Investments-Smoke Bay - 14,40 Nov, 1. Cash Interest Receiva Interest Reven Dec. 31 Smoke Bay Interest Receiva Interest Reven Dec. 31 Geotherma Co. Interest Receiva Interest Reven - 20Y6 Feb. 1 Cash - 540 Interest Receiva Interest Reven - May 1. Cash- Interest Receiva- Interest Reven- 2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure? If the bonds are classified as available-for-sale securities, then the portfolio of bonds would need to be adjusted to fair value . This would be recorded by using a valuation allowance account and an unrealized gain (- account.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 13E

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20Y5
Apr. 1.	Purchased $36,000 of Smoke Bay 5%, 10-year bonds at their face amount plus accrued interest of $300. The bonds pay interest semiannually on February 1 and August 1.
May 16.	Purchased $114,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $285. The bonds pay interest semiannually on May 1 and November 1.
Aug. 1.	Received semiannual interest on the Smoke Bay bonds.
Sept. 1.	Sold $14,400 of Smoke Bay bonds at 103 plus accrued interest of $60.
Nov. 1.	Received semiannual interest on the Geotherma Co. bonds.
Dec. 31	Accrued interest on the Smoke Bay bonds.
Dec. 31	Accrued interest on the Geotherma Co. bonds.
20Y6
Feb. 1.	Received semiannual interest on the Smoke Bay bonds.
May 1.	Received semiannual interest on the Geotherma Co. bonds.