Gaelic Industries Inc is an athletic footware company that began operations on January 1, 2016 The following transactions relate to debt investments acquired by Gaelic Industries Inc , which has a fiscal year ending on December 31 Record these transactions on page 10 2016 May 1 Purchased $85,800 of Avery Co 10 , 15 year bonds at their face amount plus accrued interest of $1,430 The bonds pay interest semiannually on March 1 and September 1 16 Purchased $64,800 of Clawhammer 5 , 10 year bonds at their face amount plus accrued interest of $135 The bonds pay interest semiannually on May 1 and November 1 Sept 1 Received semiannual interest on the Avery Co bonds 30 Sold $26,400 of Avery Co bonds at 96 plus accrued interest of $220 Nov 1 Received semiannual interest on the Clawhammer bonds Dec 31 Accrued $1,980 interest on the Avery Co bonds 31 Accrued $540 interest on the Clawhammer bonds Record these transactions on page 11 2017 Mar 1 Received semiannual interest on the Avery Co bonds May 1 Received semiannual interest on the Clawhammer bonds Required 1 Journalize the entries to record these transactions Be sure to enter the year as part of the date for the first entry on each page Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries In your computations, round per share amounts to two decimal places 2 If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure Chart of Accounts CHART OF ACCOUNTS Gaelic Industries Inc General Ledger ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 121 Allowance for Doubtful Accounts 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 161 Investments Avery Co Bonds 162 Investments Clawhammer Bonds 165 Valuation Allowance for Trading Investments 166 Valuation Allowance for Available for Sale Investments 181 Land 191 Store Equipment 192 Accumulated Depreciation Store Equipment 193 Office Equipment 194 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 231 Interest Payable 241 Salaries Payable 251 Sales Tax Payable EQUITY 311 Common Stock 312 Paid In Capital in Excess of Par Common Stock 321 Preferred Stock 322 Paid In Capital in Excess of Par Preferred Stock 331 Treasury Stock 332 Paid In Capital from Sale of Treasury Stock 340 Retained Earnings 350 Unrealized Gain (Loss) on Available for Sale Investments 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 611 Interest Revenue 612 Dividend Revenue 631 Gain on Sale of Investments 641 Unrealized Gain on Trading Investments EXPENSES 511 Cost of Merchandise Sold 512 Bad Debt Expense 515 Credit Card Expense 516 Cash Short and Over 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 561 Depreciation Expense Store Equipment 562 Depreciation Expense Office Equipment 590 Miscellaneous Expense 710 Interest Expense 731 Loss on Sale of Investments 741 Unrealized Loss on Trading Investments Journal 1 Journalize the entries to record the transactions Be sure to enter the year as part of the date for the first entry on each page Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries In your computations, round per share amounts to two decimal places PAGE 10PAGE 11 JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Adjusting Entries 18 19 20 21 Final Question 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 to be This would be accomplished by using a valuation allowance account and an unrealized gain (loss) account as part of If the fair value were than the cost of the bond portfolio, the two accounts would be positive, and thus added to investments and stockholders equity, respectively If the fair value were than the cost of the bond portfolio, the two accounts would be negative , and thus subtracted from investments and stockholders equity, respectively

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Gaelic Industries Inc. is an athletic footware company that began operations on January 1, 2016. The following transactions relate to debt investments acquired by Gaelic

Gaelic Industries Inc. is an athletic footware company that began operations on January 1, 2016. The following transactions relate to debt investments acquired by Gaelic Industries Inc., which has a fiscal year ending on December 31:

Record these transactions on page 10

2016
May	1	Purchased $85,800 of Avery Co. 10%, 15-year bonds at their face amount plus accrued interest of $1,430. The bonds pay interest semiannually on March 1 and September 1.
	16	Purchased $64,800 of Clawhammer 5%, 10-year bonds at their face amount plus accrued interest of $135. The bonds pay interest semiannually on May 1 and November 1.
Sept.	1	Received semiannual interest on the Avery Co. bonds.
	30	Sold $26,400 of Avery Co. bonds at 96 plus accrued interest of $220.
Nov.	1	Received semiannual interest on the Clawhammer bonds.
Dec.	31	Accrued $1,980 interest on the Avery Co. bonds.
	31	Accrued $540 interest on the Clawhammer bonds.

Record these transactions on page 11

2017
Mar.	1	Received semiannual interest on the Avery Co. bonds.
May	1	Received semiannual interest on the Clawhammer bonds.

Required:

1.	Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.
2.	If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?

Chart of Accounts

CHART OF ACCOUNTS

Gaelic Industries Inc.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
121	Allowance for Doubtful Accounts
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
161	Investments-Avery Co. Bonds
162	Investments-Clawhammer Bonds
165	Valuation Allowance for Trading Investments
166	Valuation Allowance for Available-for-Sale Investments
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
231	Interest Payable
241	Salaries Payable
251	Sales Tax Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Treasury Stock
332	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
350	Unrealized Gain (Loss) on Available-for-Sale Investments
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
611	Interest Revenue
612	Dividend Revenue
631	Gain on Sale of Investments
641	Unrealized Gain on Trading Investments

	EXPENSES
511	Cost of Merchandise Sold
512	Bad Debt Expense
515	Credit Card Expense
516	Cash Short and Over
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Selling Expenses
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
538	Store Supplies Expense
561	Depreciation Expense-Store Equipment
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
731	Loss on Sale of Investments
741	Unrealized Loss on Trading Investments

Journal

1. Journalize the entries to record the transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.

PAGE 10PAGE 11

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17		Adjusting Entries
18
19
20
21

Final Question

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 to be . This would be accomplished by using a valuation allowance account and an unrealized gain (loss) account as part of . If the fair value were than the cost of the bond portfolio, the two accounts would be positive, and thus added to investments and stockholders equity, respectively. If the fair value were than the cost of the bond portfolio, the two accounts would be negative , and thus subtracted from investments and stockholders equity, respectively.