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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
Apr. 1 Purchased $79,800 of Welch Co. 6%, 15-year bonds at their face amount plus accrued interest of $798. The bonds pay interest semiannually on March 1 and September 1.
June 1 Purchased $57,600 of Bailey 8%, 10-year bonds at their face amount plus accrued interest of $192. The bonds pay interest semiannually on May 1 and November 1.
Sept. 1 Received semiannual interest on the Welch Co. bonds.
30 Sold $26,400 of Welch Co. bonds at 97 plus accrued interest of $132.
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?

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 Purchased $79,800 of Welch Co. 6%, 15-year bonds at their face amount plus accrued interest of $798. The bonds pay interest semiannually on March 1 and September 1.
June 1 Purchased $57,600 of Bailey 8%, 10-year bonds at their face amount plus accrued interest of $192. The bonds pay interest semiannually on May 1 and November 1.
Sept. 1 Received semiannual interest on the Welch Co. bonds.
30 Sold $26,400 of Welch Co. bonds at 97 plus accrued interest of $132.
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?

X

Chart of Accounts

CHART OF ACCOUNTS
Soto 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-Welch Co. Bonds
162 Investments-Bailey 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
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

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

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
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 20Y4 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.

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1
2
3
4
5
6

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