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 7%, 10-year bonds at their face amount plus accrued interest of $910. The bonds pay interest semiannually on February 1 and August 1. May 16. Purchased $112,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $280. 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 $182. 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. 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(Fair value/historical cost.) This would be recorded by using a valuation allowance account and(a realized gain/unrealized gain)account.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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 7%, 10-year bonds at their face amount plus accrued interest of $910. The bonds pay interest semiannually on February 1 and August 1. |
| May 16. | Purchased $112,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $280. 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 $182. |
| 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.
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(Fair value/historical cost.) This would be recorded by using a valuation allowance account and(a realized gain/unrealized gain)account.
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