(Available for Sale Investments) Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions.
|
Feb. 1, 2012 |
Sharapova Company common stock, $100 par, 200 shares |
$ 37,400 |
|
April 1 |
U.S. government bonds, 11%, due April 1, 2022, interest payable |
110,000 |
|
July 1 |
McGrath Company 12% bonds, par $50,000, dated March 1, 2012, |
54,000 |
Instructions
(Round all computations to the nearest dollar.)
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available for sale.
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2012, using the straight line method.
(c) The fair values of the investments on December 31, 2012, were:
|
Sharapova Company common stock |
$ 31,800 |
|
U.S. government bonds |
124,700 |
|
McGrath Company bonds |
58,600 |
What entry or entries, if any, would you recommend be made?
(d) The U.S. government bonds were sold on July 1, 2013, for $119,200 plus accrued interest. Give the proper entry.