Dollar-Mart Inc. is a general merchandise retail company that began operations on January 1, 2010. The following transactions relate to debt investments acquired by Dollar-Mart Inc., which has a fiscal year ending on December 31:
May 1. Purchased $60,000 of Elkin City 4%, 10-year bonds at face value plus accrued interest of $400. The bond is classified as an available-for-sale investment.
The bonds pay interest semiannually on March 1 and September 1.
June 16. Purchased $112,000 of Morgan Co. 6%, 12-year bonds at face value plus accrued interest of $280. The bond is classified as an available-for-sale investment. The bonds pay interest semiannually on June 1 and December
1. Sept. 1. Received semiannual interest on the Elkin City bonds.
Oct. 1. Sold $24,000 of Elkin City bonds at 103 plus accrued interest of $80.
Dec. 1. Received semiannual interest on Morgan Co. bonds.
31. Accrued $480 interest on Elkin City bonds.
31. Accrued $560 interest on Morgan Co. bonds.
31. The available-for-sale bond portfolio was adjusted to fair values of 102 and 101 for Elkin City and Morgan Co. bonds, respectively.
2011
Mar. 1. Received semiannual interest on the Elkin City bonds.
June 1. Received semiannual interest on the Morgan Co. bonds.
(Assume that there are no more purchases or sales of bonds during 2011.
Also assume all subsequent interest transactions for 2011 have been recorded properly.)
Dec. 1. The available-for-sale bond portfolio was adjusted to fair values of 99 and 100 for Elkin City and Morgan Co. bonds, respectively.