Pina 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, $120 par, 240 shares |
|
$40,800 |
| April 1 |
|
U.S. government bonds, 12%, due April 1, 2027, interest payable April 1 and October 1, 96 bonds of $1,000 par each |
|
96,000 |
| July 1 |
|
McGrath Company 12% bonds, par $50,100, dated March 1, 2017, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2037
|
|
54,108 |
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 amortizatin 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 |
|
$29,300 |
| U.S. government bonds |
|
136,500 |
| McGrath Company bonds |
|
54,900 |
What entry, if any, would you recommend be made?
D. The U.S. government bonds were sold on July 1, 2018, for $115,300 plus accrued interest. Give the proper entry.