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, $116 par, 232 shares |
|
$37,600 |
| April 1 |
|
U.S. government bonds, 10%, due April 1, 2022, interest payable April 1 and October 1, 113 bonds of $1,000 par each |
|
113,000 |
| July 1 |
|
McGrath Company 12% bonds, par $50,000, dated March 1, 2012, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2032 |
|
54,000 |
(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 |
|
$32,760 |
| U.S. government bonds |
|
146,150 |
| McGrath Company bonds |
|
67,710 |
What entry or entries, if any, would you recommend be made?
(d) The U.S. government bonds were sold on July 1, 2013, for $120,250 plus accrued interest. Give the proper entry.