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 $78,000 of Smoke Bay 5%, 10-year bonds at their face amount plus accrued interest of $650. The bonds pay interest semiannually on February 1 and August 1.
May 16.	Purchased $122,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $305. The bonds pay interest semiannually on May 1 and November 1.
Aug. 1.	Received semiannual interest on the Smoke Bay bonds.
Sept. 1.	Sold $31,200 of Smoke Bay bonds at 103 plus accrued interest of $130.
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.