Prepare journal entries to record the following transactions involving the short- term securities investments of Krum Co., all of which occurred during year 2013.
a. On August 1, paid $450,000 cash to purchase Houtte’s 9% debt securities ($450,000 principal), dated July 30, 2013, and maturing January 30, 2014 (categorized as available-for-sale securities).
b. On October 30, received a check from Houtte for 90 days’ interest on the debt securities purchased in transaction a.