PR 15-1B Debt investment transactions, available-for-sale valuation
Savers Mart Inc. is a general merchandise retail company that began operations on January 1, 2012. The following transactions relate to debt investments acquired by Savers Mart Inc., which has a fiscal year ending on December 31:
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2012 |
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May 1. |
Purchased $80,000 of Northridge City 4.5%, 10-year bonds at face value plus accrued interest of $600. The bonds pay interest semiannually on March 1 and September 1. |
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June 16. |
Purchased $38,000 of Hancock Co. 6%, 12-year bonds at face value plus accrued interest of $95. The bonds pay interest semiannually on June 1 and December 1. |
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Sept. 1. |
Received semiannual interest on the Northridge City bonds. |
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Oct. 1. |
Sold $24,000 of Northridge City bonds at 102 plus accrued interest of $90. |
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Dec. 1. |
Received semiannual interest on Hancock Co. bonds. |
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31. |
Accrued $840 interest on Northridge City bonds. |
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31. |
Accrued $190 interest on Hancock Co. bonds. |
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2013 |
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Mar. 1. |
Received semiannual interest on the Northridge City bonds. |
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June 1. |
Received semiannual interest on the Hancock Co. bonds. |
Instructions
1. Journalize the entries to record these transactions.
2. If the bond portfolio was classified as available-for-sale, what impact would this have on financial statement disclosure?