Question

eBook Show Me How * Calculator 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 $36,000 of Smoke Bay 5%, 10-year bonds at their face amount plus accrued interest of $300. The bonds pay interest semiannually on February 1 and August 1. May 16. Purchased $104,000 of Geotherma Co. 6%, 12-year bonds at their face amount plus accrued interest of $260. The bonds pay interest semiannually on May 1 and November 1. Aug. 1. Received semiannual interest on the Smoke Bay bonds. Sept. 1. Sold $14,400 of Smoke Bay bonds at 103 plus accrued interest of $60. Nov. 1. Received semiannual interest on the Geotherma Co. bonds. Accrued $360 interest on Smoke Bay bonds Dec. 31 Dec. 31 Accrued $520 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. Required: 1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Date Description Debit Credit Year 1 Apr. 1. Investments-Smoke Bay Bonds ✓ Interest Receivable ✓ Cash Check My Work Next >

Answer 1

Rekya Mart Inc. Journal Enteries Date Particulars 1.4.Year 1 Investments - Smoke Bay Bonds a/c Dr. Interest Receivable a/c To Cash Debit in $ Credit in $ 36000 300 36300 Dr. 16.5.Year 1 Investments - GeoTherma Co. Bonds a/c Dr. Interest Receivable a/c Dr. To Cash 104000 260 104260 1.8.Year 1 Dr. 900 Cash a/c To Interest Receivable To Interest Revenue 36000 x 5% x 1/2 300 600 1.9. Year 1 14892 Cash a/c Dr. To Interest Revenue To Gain on Sale of Investment To Investments - Smoke Bay Bonds 14400 x 1.03 + 60 = 14892 60 432 14400 Dr. 3120 1.11. Year 1 Cash a/c To Interest Receivable To Interest Revenue 104000 x 6% x 1/2 = 3120 260 2860 Dr. 31.12.Year1 Interest Receivable a/c To Interest Revenue 360 31.12.Year1 Interest Receivable a/c To Interest Revenue 520 1.2. Year 2 360 Cash a/c Dr. To Interest Receivable To Interest Revenue (36000 - 14400) x 5% x 0.50 = 540 180 1.5.Year2 Dr. 3120 Cash a/c To Interest Receivable To Interest Revenue 104000 x 6% x 1/2 = 3120 520 2600