(Debt and Equity 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, 2017 Sharapova Company common stock, $100 par, 200 shares   :   $ 37,400 April 1 U.S. government bonds, 11%, due April 1, 2027, interest payableApril 1 and October 1, 110 bonds of $1,000 par each    :  110,000 July 1 McGrath Company 12% bonds, par $50,000, dated March 1, 2017,purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2037   :  54,000   Instructions(Round all computations to the nearest dollar.)(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that the debt securities are classified as available-for-sale.(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2017, using the straight-line method.(c) The fair values of the investments on December 31, 2017, were:Sharapova Company common stock     :    $ 31,800U.S. government bonds      :     124,700McGrath Company bonds     :     58,600What entry or entries, if any, would you recommend be made?(d) The U.S. government bonds were sold on July 1, 2018, for $119,200 plus accrued interest. Give the proper entry

Question

(Debt and Equity 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, 2017 Sharapova Company common stock, $100 par, 200 shares   :   $ 37,400

April 1 U.S. government bonds, 11%, due April 1, 2027, interest payable
April 1 and October 1, 110 bonds of $1,000 par each    :  110,000

July 1 McGrath Company 12% bonds, par $50,000, dated March 1, 2017,
purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2037   :  54,000

 

Instructions
(Round all computations to the nearest dollar.)
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that the debt securities are classified as available-for-sale.
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2017, using the straight-line method.
(c) The fair values of the investments on December 31, 2017, 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, 2018, for $119,200 plus accrued interest. Give the proper entry

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