Soto Industries Inc. is an athletic footware company that began operations on January 1, 20Y3....
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Soto Industries Inc. is an athletic footware company that began operations on January 1, 20Y3. The following are bond (held-to-maturity) transactions by Soto Industries Inc., which has a fiscal year ending on December 31:
20Y3
Apr. 1. Purchased $100,000 of Welch Co. 6%, 15-year bonds at their face amount plus accrued interest of $500. The bonds pay interest semiannually on March 1 and September 1.
June 1. Purchased $210,000 of Bailey 4%, 10-year bonds at their face amount plus accrued interest of $700. The bonds pay interest semiannually on May 1 and November 1.
Sept. 1. Received semiannual interest on the Welch Co. bonds. 30. Sold $40,000 of Welch Co. bonds at 97 plus accrued interest of $200.
Nov. 1. Received semiannual interest on the Bailey bonds.
Dec. 31. Accrued interest on the Welch Co. bonds.
31. Accrued interest on the Bailey bonds.
20Y4
Mar. 1. Received semiannual interest on the Welch Co. bonds.
May 1. Received semiannual interest on the Bailey bonds.
Instructions
1. Journalize the entries to record the preceding transactions.
2. If the bond portfolio is classified as an available-for-sale investment, would it be reported on the financial statements?
Answer & Explanation
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