Soto Industries Inc. is an athletic footware company that beganoperations on January 1, Year 1. The following transactions relateto debt investments acquired by Soto Industries Inc., which has afiscal year ending on December 31: Record these transactions onpage 10 Year 1 Apr. 1. Purchased $85,800 of Welch Co. 10%, 15-yearbonds at their face amount plus accrued interest of $1,430. Thebonds pay interest semiannually on March 1 and September 1. June 1.Purchased $64,800 of Bailey 5%, 10-year bonds at their face amountplus accrued interest of $135. The bonds pay interest semiannuallyon May 1 and November 1. Sept. 1 Received semiannual interest onthe Welch Co. bonds. 30 Sold $26,400 of Welch Co. bonds at 96 plusaccrued interest of $220. Nov. 1 Received semiannual interest onthe Bailey bonds. Dec. 31 Accrued $1,980 interest on the Welch Co.bonds. 31 Accrued $540 interest on the Bailey bonds.

Record these transactions on page 11 Year 2 Mar. 1 Receivedsemiannual interest on the Welch Co. bonds. May 1 Receivedsemiannual interest on the Bailey bonds.

Required: 1. Journalize the entries to record thesetransactions. Refer to the information given and the Chart ofAccounts provided for the exact wording of the answer choices fortext entries. 2. If the bond portfolio is classified as availablefor sale, what impact would this have on financial statementdisclosure?

CHART OF ACCOUNTS
Soto Industries Inc.
General Ledger
ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 121 Allowance for Doubtful Accounts 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 161 Investments-Welch Co. Bonds 162 Investments-Bailey Bonds 165 Valuation Allowance for Trading Investments 166 Valuation Allowance for Available-for-Sale Investments 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 231 Interest Payable 241 Salaries Payable 251 Sales Tax Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Treasury Stock 332 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 350 Unrealized Gain (Loss) on Available-for-Sale Investments 351 Cash Dividends 352 Stock Dividends 390 Income Summary	REVENUE 410 Sales 611 Interest Revenue 612 Dividend Revenue 631 Gain on Sale of Investments 641 Unrealized Gain on Trading Investments

1a. Journalize the entries to record Year 1 transactions. Referto the information given and the Chart of Accounts provided for theexact wording of the answer choices for text entries.