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:
| 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. |
| 31. | Accrued $840 interest on Northridge City bonds. |
| 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?
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