eBook Show Me How Question Content Area Transactions for Bond (Held-to-Maturity) Investments Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, 20Y5. The following are bond (held-to-maturity) transactions by Rekya Mart Inc., which has a fiscal year ending on December 31:

20Y5

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 $126,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $315. 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.

20Y6

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

20Y5

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

20Y6

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.