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 $7 million, losses were $14 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 $24 million. 13 Purchased 2 million Ferry Intercommunications common shares for $22 million. 15 Sold the FF&G Corporation bonds for $24.3 million. 22 Purchased U.S. Treasury bills for $72 million and Treasury bonds for $77 million. 23 Sold half the Ferry Intercommunications common shares for $10 million. 26 Sold the U.S. Treasury bills for $78 million. 27 Sold the Treasury bonds for $74 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 $10 per share. 2019 Jan. 2 Sold the remaining Ferry Intercommunications common shares for $10.2 million. 5 Purchased Warehouse Designs Corporation bonds for $46 million. Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018. 2. Indicate any amounts that American would report in its 2018 balance sheet and income statement as a result of these investments. 3. Prepare the appropriate journal entry for each transaction or event during 2019. Required 1 Required 2 Required 3 Prepare the appropriate journal entry for each transaction or event during 2018. (If no entry is requ transaction/event, select "No journal entry required" in the first account field. Enter your answers in decimal place, (i.e., 5,500,000 should be entered as 5.5).) No Date General Journal Debit Credit 1 December 12, 201 Investment in FF&G Corporation bonds 24.0 Cash 24.0 22.0 December 13, 201 Investment in Ferry shares Cash 22.0 3 December 15, 201 No journal entry required 4 24.3 December 15, 201 Cash Investment in FF&G Corporation bonds Gain on sale of investments 24.0 0.3 5 December 22, 201 Investment in U.S. treasury bills Investment in U.S. treasury bonds Cash 72.0 77.0 149.0 6 December 23, 201 No journal entry required 7 December 23, 201 Cash Loss on sale of investments Investment in Ferry shares 10.0 1.0 1.0 8 December 26, 201 No journal entry required 9 78.0 December 26, 201 Cash Investment in U.S. treasury bills Gain on sale of investments 72.0 6.0 10 December 27, 201 No journal entry required 11 December 27, 201 Cash Loss on sale of investments Investment in U.S. treasury bonds 74.0 3.0 77.0 12 0.2 December 28, 201 Cash Dividend revenue 0. 21 1.0 December 31, 201 Unrealized holding loss-NI Fair value adjustment 1.0 Required 1 Required 2 Required 3 Indicate any amounts that American would report in its 2018 balance shee investments. (Amounts to be deducted should be indicated with a minus s decimal place, (i.e., 5,500,000 should be entered as 5.5).) ($ in millions) Balance sheet (short-term investment): Trading Securities Less: Fair value adjustment Total 11.0 1.0 $ Income statement: Investment revenue Gain on sale of investments Loss on sale of investments Unrealized holding lossNI 5.2 13.3 18.0 X 1.0 Required 1 Required 2 Required 3 Prepare the appropriate journal entry for each transaction or event during 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions decimal place, (i.e., 5,500,000 should be entered as 5.5).) No Debit Credit Date General Journal January 02, 2019 No journal entry required 10.2 January 02, 2019 Cash Investment in Ferry shares Gain on sale of investments 10.0 X 0.2 X OO January 05, 2019 Investment in Warehouse Designs bonds 46.0 Cash 46.0 Journal entry worksheet Ko @ : @ 6 6 O ..... Record the entry to adjust to fair value on the date of sale of the FF&G Corporation bonds Note: Enter debits before credits. Debit Credit Date General Journal December 15, 2018 No journal entry required Journal entry worksheet 2 3 4 1 Record the entry to adjust to fair value on the date of sale of the Ferry Intercommunications common shares Note: Enter debits before credits. Debit Credit Date General Journal December 23, 2018 No journal entry required Journal entry worksheet Record the entry to adjust to fair value on the date of sale of the U.S. Treasury bills Note: Enter debits before credits. Debit Credit Date General Journal December 26, 2018 No journal entry required 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 $7 million, losses were $14 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 $24 million. 13 Purchased 2 million Ferry Intercommunications common shares for $22 million. 15 Sold the FF&G Corporation bonds for $24.3 million. 22 Purchased U.S. Treasury bills for $72 million and Treasury bonds for $77 million. 23 Sold half the Ferry Intercommunications common shares for $10 million. 26 Sold the U.S. Treasury bills for $78 million. 27 Sold the Treasury bonds for $74 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 $10 per share. 2019 Jan. 2 Sold the remaining Ferry Intercommunications common shares for $10.2 million. 5 Purchased Warehouse Designs Corporation bonds for $46 million. Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018. 2. Indicate any amounts that American would report in its 2018 balance sheet and income statement as a result of these investments. 3. Prepare the appropriate journal entry for each transaction or event during 2019. Required 1 Required 2 Required 3 Prepare the appropriate journal entry for each transaction or event during 2018. (If no entry is requ transaction/event, select "No journal entry required" in the first account field. Enter your answers in decimal place, (i.e., 5,500,000 should be entered as 5.5).) No Date General Journal Debit Credit 1 December 12, 201 Investment in FF&G Corporation bonds 24.0 Cash 24.0 22.0 December 13, 201 Investment in Ferry shares Cash 22.0 3 December 15, 201 No journal entry required 4 24.3 December 15, 201 Cash Investment in FF&G Corporation bonds Gain on sale of investments 24.0 0.3 5 December 22, 201 Investment in U.S. treasury bills Investment in U.S. treasury bonds Cash 72.0 77.0 149.0 6 December 23, 201 No journal entry required 7 December 23, 201 Cash Loss on sale of investments Investment in Ferry shares 10.0 1.0 1.0 8 December 26, 201 No journal entry required 9 78.0 December 26, 201 Cash Investment in U.S. treasury bills Gain on sale of investments 72.0 6.0 10 December 27, 201 No journal entry required 11 December 27, 201 Cash Loss on sale of investments Investment in U.S. treasury bonds 74.0 3.0 77.0 12 0.2 December 28, 201 Cash Dividend revenue 0. 21 1.0 December 31, 201 Unrealized holding loss-NI Fair value adjustment 1.0 Required 1 Required 2 Required 3 Indicate any amounts that American would report in its 2018 balance shee investments. (Amounts to be deducted should be indicated with a minus s decimal place, (i.e., 5,500,000 should be entered as 5.5).) ($ in millions) Balance sheet (short-term investment): Trading Securities Less: Fair value adjustment Total 11.0 1.0 $ Income statement: Investment revenue Gain on sale of investments Loss on sale of investments Unrealized holding lossNI 5.2 13.3 18.0 X 1.0 Required 1 Required 2 Required 3 Prepare the appropriate journal entry for each transaction or event during 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions decimal place, (i.e., 5,500,000 should be entered as 5.5).) No Debit Credit Date General Journal January 02, 2019 No journal entry required 10.2 January 02, 2019 Cash Investment in Ferry shares Gain on sale of investments 10.0 X 0.2 X OO January 05, 2019 Investment in Warehouse Designs bonds 46.0 Cash 46.0 Journal entry worksheet Ko @ : @ 6 6 O ..... Record the entry to adjust to fair value on the date of sale of the FF&G Corporation bonds Note: Enter debits before credits. Debit Credit Date General Journal December 15, 2018 No journal entry required Journal entry worksheet 2 3 4 1 Record the entry to adjust to fair value on the date of sale of the Ferry Intercommunications common shares Note: Enter debits before credits. Debit Credit Date General Journal December 23, 2018 No journal entry required Journal entry worksheet Record the entry to adjust to fair value on the date of sale of the U.S. Treasury bills Note: Enter debits before credits. Debit Credit Date General Journal December 26, 2018 No journal entry required