Cardinal 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, 2014 Sharp Company common stock, $100 par, 200 shares $37,400

April 1 U.S. government bonds, 11%, due April 1, 2024, interest

payable April 1 and October 1, 110 bonds of $1,000 par each 110,000

July 1 Grath Company 12% bonds, par $50,000, dated

March 1, 2014, purchased at 104 plus accrued interest,

interest payable annually on March 1, due March 1, 2034 54,000

Instructions

(Round all computations to the nearest dollar.)

(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, 2014, using the straight-line method.