Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, 2014. The

Question:

Rekya Mart Inc. is a general merchandise retail company that began operations on January 1, 2014. The following transactions relate to debt investments acquired by Rekya Mart Inc., which has a fiscal year ending on December 31:

2014

Apr. 1. Purchased $90,000 of Smoke Bay 6%, 10-year bonds at their face amount plus accrued interest of $900. The bonds pay interest semiannually on February 1 and August 1.

May 16. Purchased $42,000 of Geotherma Co. 4%, 12-year bonds at their face amount plus accrued interest of $70. The bonds pay interest semiannually on May 1 and November 1.

Aug. 1. Received semiannual interest on the Smoke Bay bonds.

Sept. 1. Sold $12,000 of Smoke Bay bonds at 101 plus accrued interest of $60.

Nov. 1. Received semiannual interest on the Geotherma Co. bonds.

Dec. 31. Accrued $1,950 interest on the Smoke Bay bonds.

31. Accrued $280 interest on the Geotherma Co. bonds.

2015

Feb. 1. Received semiannual interest on the Smoke Bay bonds.

May 1. Received semiannual interest on the Geotherma Co. 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?

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...