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Journalize the entries to record these transactions

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Reference no: EM132683757

Problem - 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:

2012

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.

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.

Sept. 1. Received semiannual interest on the Northridge City bonds.

Oct. 1. Sold $24,000 of Northridge City bonds at 102 plus accrued interest of $90.

Dec. 1. Received semiannual interest on Hancock Co. bonds.

Dec. 31. Accrued $840 interest on Northridge City bonds.

Dec. 31. Accrued $190 interest on Hancock Co. bonds.

2013

Mar. 1. Received semiannual interest on the Northridge City bonds.

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?

Reference no: EM132683757

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