Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31: Year 1 Apr. 1 Purchased $90,000 of Smoke Bay 6%, 10-year bonds at their face amount plus accrued interest of $900. The bonds pay interest semiannually on February 1 and August 1. May 16 Purchased $42,000 of Geotherma Co. 4%, 12-year bonds at their face amount plus accrued interest of $70. The bonds pay interest semiannually on May 1 and November 1. Aug. 1 Received semiannual interest on the Smoke Bay bonds. Sept. 1 Sold $12,000 of Smoke Bay bonds at 101 plus accrued interest of $60. Nov. 1 Received semiannual interest on the Geotherma Co. bonds. Dec. 31 Accrued $1,950 interest on the Smoke Bay bonds. Dec. 31 Accrued $280 interest on the Geotherma Co. bonds. Year 2 Feb. 1 Received semiannual interest on the Smoke Bay bonds. May 1 Received semiannual interest on the Geotherma Co. bonds. Required: 1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Date Description Debit Credit Year 1 Apr. 1 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 May 16 fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 fill in the blank 17 fill in the blank 18 Aug. 1 fill in the blank 20 fill in the blank 21 fill in the blank 23 fill in the blank 24 fill in the blank 26 fill in the blank 27 Sept. 1 fill in the blank 29 fill in the blank 30 fill in the blank 32 fill in the blank 33 fill in the blank 35 fill in the blank 36 fill in the blank 38 fill in the blank 39 Nov. 1 fill in the blank 41 fill in the blank 42 fill in the blank 44 fill in the blank 45 fill in the blank 47 fill in the blank 48 Dec. 31-Smoke Bay fill in the blank 50 fill in the blank 52 Dec. 31-Geotherma Co. fill in the blank 54 fill in the blank 56 Year 2 Feb. 1 fill in the blank 58 fill in the blank 59 fill in the blank 61 fill in the blank 62 fill in the blank 64 fill in the blank 65 May 1 fill in the blank 67 fill in the blank 68 fill in the blank 70 fill in the blank 71 fill in the blank 73 fill in the blank 74 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 . This would be accomplished by using a valuation allowance account and account.

Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31: Year 1 Apr. 1 Purchased $90,000 of Smoke Bay 6%, 10-year bonds at their face amount plus accrued interest of $900. The bonds pay interest semiannually on February 1 and August 1. May 16 Purchased $42,000 of Geotherma Co. 4%, 12-year bonds at their face amount plus accrued interest of $70. The bonds pay interest semiannually on May 1 and November 1. Aug. 1 Received semiannual interest on the Smoke Bay bonds. Sept. 1 Sold $12,000 of Smoke Bay bonds at 101 plus accrued interest of $60. Nov. 1 Received semiannual interest on the Geotherma Co. bonds. Dec. 31 Accrued $1,950 interest on the Smoke Bay bonds. Dec. 31 Accrued $280 interest on the Geotherma Co. bonds. Year 2 Feb. 1 Received semiannual interest on the Smoke Bay bonds. May 1 Received semiannual interest on the Geotherma Co. bonds. Required: 1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Date Description Debit Credit Year 1 Apr. 1 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 May 16 fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 fill in the blank 17 fill in the blank 18 Aug. 1 fill in the blank 20 fill in the blank 21 fill in the blank 23 fill in the blank 24 fill in the blank 26 fill in the blank 27 Sept. 1 fill in the blank 29 fill in the blank 30 fill in the blank 32 fill in the blank 33 fill in the blank 35 fill in the blank 36 fill in the blank 38 fill in the blank 39 Nov. 1 fill in the blank 41 fill in the blank 42 fill in the blank 44 fill in the blank 45 fill in the blank 47 fill in the blank 48 Dec. 31-Smoke Bay fill in the blank 50 fill in the blank 52 Dec. 31-Geotherma Co. fill in the blank 54 fill in the blank 56 Year 2 Feb. 1 fill in the blank 58 fill in the blank 59 fill in the blank 61 fill in the blank 62 fill in the blank 64 fill in the blank 65 May 1 fill in the blank 67 fill in the blank 68 fill in the blank 70 fill in the blank 71 fill in the blank 73 fill in the blank 74 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 . This would be accomplished by using a valuation allowance account and account.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 6PA: Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000...

See similar textbooks

Related questions

Question

Debt Investment Transactions, Available-for-Sale Valuation

Year 1
Apr. 1	Purchased $90,000 of Smoke Bay 6%, 10-year bonds at their face amount plus accrued interest of $900. The bonds pay interest semiannually on February 1 and August 1.
May 16	Purchased $42,000 of Geotherma Co. 4%, 12-year bonds at their face amount plus accrued interest of $70. The bonds pay interest semiannually on May 1 and November 1.
Aug. 1	Received semiannual interest on the Smoke Bay bonds.
Sept. 1	Sold $12,000 of Smoke Bay bonds at 101 plus accrued interest of $60.
Nov. 1	Received semiannual interest on the Geotherma Co. bonds.
Dec. 31	Accrued $1,950 interest on the Smoke Bay bonds.
Dec. 31	Accrued $280 interest on the Geotherma Co. bonds.
Year 2
Feb. 1	Received semiannual interest on the Smoke Bay bonds.
May 1	Received semiannual interest on the Geotherma Co. bonds.

Required:

1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

Date	Debit	Credit
Year 1
Apr. 1	fill in the blank 2	fill in the blank 3
	fill in the blank 5	fill in the blank 6
	fill in the blank 8	fill in the blank 9

May 16	fill in the blank 11	fill in the blank 12
	fill in the blank 14	fill in the blank 15
	fill in the blank 17	fill in the blank 18

Aug. 1	fill in the blank 20	fill in the blank 21
	fill in the blank 23	fill in the blank 24
	fill in the blank 26	fill in the blank 27

Sept. 1	fill in the blank 29	fill in the blank 30
	fill in the blank 32	fill in the blank 33
	fill in the blank 35	fill in the blank 36
	fill in the blank 38	fill in the blank 39

Nov. 1	fill in the blank 41	fill in the blank 42
	fill in the blank 44	fill in the blank 45
	fill in the blank 47	fill in the blank 48

Dec. 31-Smoke Bay	fill in the blank 50
		fill in the blank 52

Dec. 31-Geotherma Co.	fill in the blank 54
		fill in the blank 56

Year 2
Feb. 1	fill in the blank 58	fill in the blank 59
	fill in the blank 61	fill in the blank 62
	fill in the blank 64	fill in the blank 65

May 1	fill in the blank 67	fill in the blank 68
	fill in the blank 70	fill in the blank 71
	fill in the blank 73	fill in the blank 74

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 . This would be accomplished by using a valuation allowance account and account.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions