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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.1,2012Sharapova Company common stock, $107par,214shares$44,900April1U.S. government bonds,10%, due April 1, 2022, interest payable April 1 and October 1,115bonds of $1,000par each115,000July1McGrath Company12% bonds, par $53,600, dated March 1, 2012, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 203257,888
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available-for-sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and ExplanationDebitCredit
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2012, using the straight-line method. (Round answers to 0 decimal places, e.g. $2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and ExplanationDebitCredit
(c) The fair values of the investments on December 31, 2012, were:
Sharapova Company common stock$32,270U.S. government bonds148,840McGrath Company bonds66,510
What entry or entries, if any, would you recommend be made?(Round answers to 0 decimal places, e.g. $2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and ExplanationDebitCredit
(d) The U.S. government bonds were sold on July 1, 2013, for $119,860plus accrued interest. Give the proper entry.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and ExplanationDebitCredit

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