What impact would have on financial statement disclosure

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Reference no: EM132692331

Problem - Soto Industries Inc. is an athletic footware company that began operations on January 1, Year 1. The following transactions relate to debt investments acquired by Soto Industries Inc., which has a fiscal year ending on December 31:

Year 1

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 $1,200 interest on the Welch Co. bonds.

31. Accrued $1,400 interest on the Bailey bonds.

Year 2

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 these transactions.

2. If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure?

Reference no: EM132692331

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