Soto Industries Inc. is an athletic footware company that began operations on January 1, 20Y3. The following are bond (held-to-maturity) transactions by Soto Industries Inc., which has a fiscal year ending on December 31: Record these transactions on page 10 20Y3 Apr. 1 June 1 Purchased $81,600 of Welch Co. 4%, 15-year bonds at their face amount plus accrued interest of $544. The bonds pay interest semiannually on March 1 and September 1. Purchased $60,000 of Bailey 8%, 10-year bonds at their face amount plus accrued interest of $200. The bonds pay interest semiannually on May 1 and November 1. Received semiannual interest on the Welch Co. bonds. Sept. 1 30 Sold $25,200 of Welch Co. bonds at 96 plus accrued interest of $84. Nov. 1 Received semiannual interest on the Bailey bonds. Accrued interest on the Welch Co. bonds. Dec. 31 31 Accrued interest on the Bailey bonds. Record these transactions on page 11 2014 Mar. 1 Received semiannual interest on the Welch Co. bonds. May 1 Received semiannual interest on the Bailey bonds. 20Y4 Mar. 1 Received semiannual interest on the Welch Co. bonds. May 1 Received semiannual interest on the Bailey bonds. Required: 1. Journalize the entries to record these transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Assume 360 days a year. Do not round your intermediate calculations and round final answers to the nearest dollar. 2. If the bond portfolio is classified as an available-for-sale investment, how would it be reported on the financial statements? hart of Accounts CHART OF ACCOUNTS Soto Industries Inc. General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 611 Interest Revenue 120 Accounts Receivable 612 Dividend Revenue 121 Allowance for Doubtful Accounts 631 Gain on Sale of Investments 131 Notes Receivable 641 Unrealized Gain on Trading Investments 121 Allowance for Doubtful Accounts 631 Gain on Sale of Investments 131 Notes Receivable 641 Unrealized Gain on Trading Investments 132 Interest Receivable 141 Merchandise Inventory EXPENSES 145 Office Supplies 511 Cost of Merchandise Sold 146 Store Supplies 512 Bad Debt Expense 151 Prepaid Insurance 515 Credit Card Expense 161 Investments-Welch Co. Bonds 516 Cash Short and Over 162 Investments-Bailey Bonds 520 Salaries Expense 165 Valuation Allowance for Trading Investments 531 Advertising Expense 166 Valuation Allowance for Available-for-Sale Investments 532 Delivery Expense 181 Land 533 Repairs Expense 191 Store Equipment 534 Selling Expenses 192 Accumulated Depreciation-Store Equipment 535 Rent Expense 193 Office Equipment 536 Insurance Expense 194 Accumulated Depreciation Office Equipment 537 Office Supplies Expense 538 Store Supplies Expense LIABILITIES 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipment 210 Accounts Payable 221 Notes Payable 590 Miscellaneous Expense 231 Interest Payable 710 Interest Expense 241 Salaries Payable 731 Loss on Sale of Investments 251 Sales Tax Payable 741 Unrealized Loss on Trading Investments 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 Journal 1a. Journalize the entries to record 20Y3 transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Assume 360 days a year. Do not round your intermediate calculations and round final answers to the nearest dollar. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Adjusting Entries 18 19 20 21 1b. Journalize the entries to record 2044 transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent credit entry when a credit amount entered. Assume 360 days a year. Do not round your intermediate calculations and round final answers to the nearest dollar. PAGE 11 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 2 3 4 5 Final Question 2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure? This would be accomplished by using a than the cost of the bond If the bonds are classified as available-for-sale securities, then the portfolio of bonds would need to be valuation allowance account and an unrealized gain (loss) account as part of . If the fair value were portfolio, the two accounts would be positive and, thus, added to investments and stockholders' equity, respectively. If the fair value were the two accounts would be negative and, thus, subtracted from investments and stockholders' equity, respectively. than the cost of the bond portfolio