Question

Exercise 15-4 Accounting for short-term held-to-maturity securities LO P2

Prepare journal entries to record the following transactions involving the short-term securities investments of Natura Co., all of which occurred during year 2017.

On June 15, paid $278,000 cash to purchase Remedy’s 90-day short-term debt securities ($278,000 principal), dated June 15, that pay 5% interest (categorized as held-to-maturity securities).

On September 16, received a check from Remedy in payment of the principal and 90 days' interest on the debt securities purchased in transaction a. (Use 360 days in a year. Do not round your intermediate calculations.)

Journal entry worksheet 2 On June 15, paid $278,000 cash to purchase Remedy's 90-day short-term debt securities ($278,000 principal), dated June 15, that pay 5% interest (categorized as held-to-maturity securities). Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal

Answer 1

Solution :

Journal Entries - Natura Co.
Event	Date	Particulars	Debit	Credit
1	15-Jun	Debt Investment Dr	$278,000.00
		To Cash		$278,000.00
		(To record investment in short term debt securities)
2	16-Sep	Cash Dr	$281,475.00
		To Debt Investment		$278,000.00
		To Interest Revenue ($278,000*5%*90/360)		$3,475.00
		(To record interest accrued)