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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.,
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 | ||
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Apr. | 1 | Purchased $100,000 of Welch Co. 6%, 15-year bonds at their face amount plus accrued interest of $500. The bonds pay interest semiannually on March 1 and September 1. |
June | 1 | Purchased $210,000 of Bailey 4%, 10-year bonds at their face amount plus accrued interest of $700. The bonds pay interest semiannually on May 1 and November 1. |
Sept. | 1 | Received semiannual interest on the Welch Co. bonds. |
30 | Sold $40,000 of Welch Co. bonds at 97 plus accrued interest of $200. | |
Nov. | 1 | Received semiannual interest on the Bailey bonds. |
Dec. | 31 | Accrued interest on the Welch Co. bonds. |
31 | Accrued interest on the Bailey bonds. |
Record these transactions on page 11
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? |
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