American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2018, gains from selling trading securities totaled $4 million, losses were $8 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account and equity securities investment account during December 2018, and the first week of 2019. The company's fiscal year ends on December 31. No trading securities were held by American on December 1, 2018. 2018 Dec. 12 Purchased FF&G Corporation bonds for $17 million. 13 Purchased 2 million Ferry Intercommunications common shares for $32 million. 15 Sold the FF&G Corporation bonds for $17.5 million. 22 Purchased U.S. Treasury bills for million and Treasury bonds for $70 million. 23 Sold half the Ferry Intercommunications common shares for $11 million. 26 Sold the U.S. Treasury bills for $63 million. 27 Sold the Treasury bonds for $65 million. 28 Received cash dividends of $200,000 from the Ferry Intercommunications common shares. 31 Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Ferry Intercommunications stock was $11 per share. 2019 Jan. 2 Sold the remaining Ferry Intercommunications common shares for $11.5 million. 5 Purchased Warehouse Designs Corporation bonds for $39 million. Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018. 2. Indicate any amounts that American would report in its 2018 balance sheet and income statement as a result of these investments. 3. Prepare the appropriate journal entry for each transaction or event during 2019. Journal entry worksheet Record the entry for sale FF&G Corporation bonds for $17.5 million. Journal entry worksheet Record the entry to adjust to fair value on the date of sale of the Ferry Intercommunications common shares Journal entry worksheet Record the entry for cash dividend received of $200,000 from the Ferry Intercommunications common shares. Journal entry worksheet Record the entry for Fair-value adjustment. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Indicate any amounts that American would report in its 2018 balance sheet and income statement as a result of these investments. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).) ($ in millions) 11.0 X Balance sheet (short-term investment): Trading Securities Less: Fair value adjustment Total 1.0 $ 10.0 $ Income statement Investment revenue Loss on sale of investments Loss on sale of investments Unrealized holding lossNI 5.2 9.1 (14.0) (1.0) Red text indicates no response was expected in a cell or a formula-based calculation is incorrect: no points deducted Record the entry to adjust to fair value on the date of sale of the Ferry Intercommunications common shares Note: Enter debits before credits. Credit Debit 10.2 Date General Journal January 02, 2019 Cash Loss on sale of investments Investment in Ferry shares 0.8 11.0 Record the sale of the remaining Ferry Intercommunications common shares for $11.5 million. Note: Enter debits before credits. Date Debit Credit General Journal January 02, 2019 Investment in Warehouse Designs bonds Cash 39.0
