Soto Industries Inc. is an athletic footware company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Soto Industries Inc., which has a fiscal year ending on December 31: Record these transactions on page 10 Year 1     Apr. 1. Purchased $71,400 of Welch Co. 9%, 15-year bonds at their face amount plus accrued interest of $1,071. The bonds pay interest semiannually on March 1 and September 1. June 1. Purchased $60,000 of Bailey 8%, 10-year bonds at their face amount plus accrued interest of $200. The bonds pay interest semiannually on May 1 and November 1. Sept. 1 Received semiannual interest on the Welch Co. bonds.   30 Sold $26,400 of Welch Co. bonds at 97 plus accrued interest of $198. Nov. 1 Received semiannual interest on the Bailey bonds. Dec. 31 Accrued $1,350 interest on the Welch Co. bonds.   31 Accrued $800 interest on the Bailey bonds.   Record these transactions on page 11 Year 2     Mar. 1 Received semiannual interest on the Welch Co. bonds. May 1 Received semiannual interest on the Bailey bonds.   Required: 1.  Journalize the entries to record these transactions. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. 2.  If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure? 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    . This would be accomplished by using a valuation allowance account and an unrealized gain (loss) account as part of    . If the fair value were    than the cost of the bond portfolio, the two accounts would be positive and, thus, added to investments and stockholders’ equity, respectively. If the fair value were   than the cost of the bond portfolio,

Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $21,300,000 of five-year, 4% bonds at a market (effective) interest rate of 3%, receiving cash of $22,282,220. Interest is payable semiannually on April 1 and October 1. Required:   a. Journalize the entries to record the following. Refer to the Chart of Accounts for exact wording of account titles. 1. Issuance of bonds on April 1, 20Y1. 2. First interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.)   b. Explain why the company was able to issue the bonds for $22,282,220 rather than for the face amount of $21,300,000. CHART OF ACCOUNTSSmiley CorporationGeneral Ledger   ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies…

On the first day of its fiscal year, Simon Company issued $2,500,000 of 5-year, 10% bonds to finance its operations of producing and selling video equipment. Interest is payable semiannually. The bonds were issued at an effective interest rate of 12%, resulting in Simon Company receiving cash of $2,316,011 a. Journalize the entries to record the following: 1. Sale of the bonds. 2. First semiannual interest payment, including amortization of discount. 3. Second semiannual interest payment, including amortization of discount. b. Compute the amount of the bond interest expense for the first year.

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 20Y1     July 1 Issued $74,000,000 of 20-year, 11% callable bonds dated July 1, 20Y1, at a market (effective) rate of 13%, receiving cash of $63,532,267. Interest is payable semiannually on December 31 and June 30. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y2     June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. Dec. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $261,693 is combined with the semiannual interest payment. 20Y3     June 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $9,420,961 after payment of interest and amortization of discount have been recorded. (Record the…