Debt Investment Transactions, Available-for-Sale ValuationRekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31:Year 1 Apr. 1.Purchased $78,000 of Smoke Bay 4%, 10-year bonds at their face amount plus accrued interest of $520. The bonds pay interest semiannually on February 1 and August 1.May 16.Purchased $120,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $300. 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 104 plus accrued interest of $104.Nov. 1.Received semiannual interest on the Geotherma Co. bonds.Dec. 31Accrued $624 interest on Smoke Bay bonds.Dec. 31Accrued $600 interest on Geotherma Co. bonds.Year 2 Feb. 1.Received semiannual interest on the Smoke Bay bonds.May 1.Received semiannual interest on the Geotherma Co. bonds.

Journal Entry:- These are prepared by the companies with debit and credit sides in order to match…

Answered: Debt Investment Transactions,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Debt Investment Transactions, Available-for-Sale Valuation

Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31:

Year 1
Apr. 1.	Purchased $78,000 of Smoke Bay 4%, 10-year bonds at their face amount plus accrued interest of $520. The bonds pay interest semiannually on February 1 and August 1.
May 16.	Purchased $120,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $300. 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 104 plus accrued interest of $104.
Nov. 1.	Received semiannual interest on the Geotherma Co. bonds.
Dec. 31	Accrued $624 interest on Smoke Bay bonds.
Dec. 31	Accrued $600 interest on Geotherma Co. bonds.
Year 2
Feb. 1.	Received semiannual interest on the Smoke Bay bonds.
May 1.	Received semiannual interest on the Geotherma Co. bonds.

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