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Debt Investment Transactions, Available-for-Sale Valuation Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions
Debt Investment Transactions, Available-for-Sale Valuation 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. Received semiannual interest on the Geotherma Co. bonds. Nov. 1 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: Date Description Debit Credit Year 1 Apr. 1 90,000 Investments-Smoke Bay Bonds Interest Receivable Cash 900 90,900 May 16 Investments-Geotherma Co. Bonds 42,000 Interest Receivable 70 Cash 42,070 Aug. 1 Cash Interest Receivable Interest Revenue Sept. 1 Cash Interest Revenue Gain on Sale of Investment Investments-Smoke Bay Bonds Nov. 1 Cash Interest Receivable Interest Revenue Dec. 31-Smoke Bay Interest Receivable Interest Revenue Dec. 31-Geotherma Co. Interest Receivable 1 Interest Revenue Year 2 Feb. 1 Cash Interest Receivable Interest Revenue May 1 Cash Interest Receivable Interest Revenue
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