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Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investments purchases, and no credits,...
Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investments purchases, and no credits, with the following descriptions.2/1/10 Sharapova Company common stock, $100 par, 200 shares. --$37,4004/1/10 U.S. government bonds, 11%, due April 1, 2020,interest payable April 1, and October 1, 110 bonds of $1000 par each. --$110,0007/1/10 McGrath Company 12% bonds, par $50,000 dated March 1, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030. --$54,000Instructions(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, 2010 using the straight-line method.(c) The fair values of the securities on December 31, 2010, were:Sharapova Company common stock $31,800U.S. government bonds 124,700McGrath Company bonds 58,600(d) The U.S. government bonds were sold on July 1, 2011, for $119,200 plus accrued interest. Give the proper entry.
ANSWER TO PART (a)Investment in Sharapova a/cTo BankInvestment in Government Bond a/cInterest Receivable a/cTo Bank a/c drdrdr 37400374001068183182110000 Investment in Mcgrath a/cdr...