Chapter $15$

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Transactions for Bond $($Held$-$to$-$Maturity$)$ Investments

Rekya Mart Inc. is a general merchandise retail company that began operations on January $1,20$Y$5.$ The following are bond $($held$-$to$-$maturity$)$ transactions by Rekya Mart Inc., which has a fiscal year ending on December $31$:

$20$Y$5$

Apr. $1.$ Purchased $$54,000$ of Smoke Bay $7\%,10-$year bonds at their face amount plus accrued interest of $$630.$ The bonds pay interest semiannually on February $1$ and August $1.$

May $16.$ Purchased $$106,000$ of Geotherma Co$.6\%,12-$year bonds at their face amount plus accrued interest of $$265.$ The bonds pay interest semiannually on May $1$ and November $1.$

Aug. $1.$ Received semiannual interest on the Smoke Bay bonds.

Sept. $1.$ Sold $$21,600$ of Smoke Bay bonds at $104$ plus accrued interest of $$126.$

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.

$20$Y$6$

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. If an amount box does not require an entry, leave it blank. Do not round your intermediate calculations and round final answers to the nearest dollar. Use the nearest whole month for the interest period.

Date Description Debit Credit

$20$Y$5$

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 $51$

fill in the blank $53$

fill in the blank $54$

Dec. $31$ Geotherma Co$.$

fill in the blank $56$

fill in the blank $57$

fill in the blank $59$

fill in the blank $60$

$20$Y$6$

Feb. $1.$

fill in the blank $62$

fill in the blank $63$

fill in the blank $65$

fill in the blank $66$

fill in the blank $68$

fill in the blank $69$

May $1.$

fill in the blank $71$

fill in the blank $72$

fill in the blank $74$

fill in the blank $75$

fill in the blank$77$

fill in the blank $78$

$2.$ 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 recorded by using a valuation allowance account and

account.