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Exercise C-4 Accounting for short-term held to-maturity securities LO P2 Prepare journal entries to record the following transactions involving the short- term securities investments of Natura Co, all of which occurred during year 2015 a. On June 15, paid $1,000,000 cash to purchase Remedy’s 90-day short-term debt securities ($1,000,000 principal), dated June 15, that pay 10% interest (categorized as held-to-maturity securities). b. On September 16, received a check from Remedy in payment of the principal and 90 days’ interest on the debt securities purchased in transaction a. (Use 360 days in a year. Do not round your intermediate calculations.) Credit 122,000 122 000 0 on June 15, paid $1,000,000 cash to purchase Remedy’s/ 90-day short-term debt securities ($1,000,000 principal), dated June 15, that pay 10% interest (categorized as held-to-maturity securities). 124,135 2.135 122 000 2 On September 16, received a check from Remedy in payment of the principal and 90 days’ interest on the debt securities purchased in transaction a
Expert Answer
Solution.
Preparetion of journal entry.
| Date | Account Title | Debit | Credit |
| 15-Jun | Short term investment – Remedy’s stock | 1,000,000 | |
| Cash | 1,000,000 | ||
| (To record purchase of remedy’s stock) | |||
| 15-Jun | Cash | 1,025,000* | |
| Shortterm Investment-Remedy’s | 1,000,000 | ||
| Interest revenue | 25,000* | ||
| (To record return from investment) |
Note:-
Return from short term debt security investment is…
$1,000,000 x 0.10 x 90/360 = $25,000.
