On January 1, 2025, Homer’s Restaurant decides to invest in Lake Como bonds. The bonds mature on December 31, 2030, and pay interest on June 30 and December 31 at 6% annually. The market rate of interest was 6% on January 1, 2025, so the $100,000 maturity value bonds sold for face value. Homer’s Restaurant intends to hold the bonds until December 31, 2030.

Requirements 

1. Journalize the transactions related to Homer’s Restaurant’s investment in Lake Como bonds during 2025. 

2. In what category would Homer’s Restaurant report the investment on the December 31, 2025, balance sheet?