July 1, 2016, convertible preferred stock that had originally been issued at par value were converted into 500 shares of common stock. The book value method was used to account for the conversion. The long-term note payable was paid by issuing 250 shares of common stock at the beginning of the scal year. Short-term marketable securities were purchased at a cost of $1,300. The portfolio was increased by $300 to a $14,800 fair value at yearend by adjusting the related allowance account. During the year, a 30% interest in Ricochet Co. was purchased as an investment for $9,500. Ricochet reported $20,000 in net income for the year and paid dividends of $2,000 to Smart. $5,000 of accounts receivable were written off as uncollectible during the year. Smart's inventory consists of Construction-in-Process in excess of the Billings on Construction-in-Process account balance. A building was destroyed by re during the year and insurance proceeds of $26,000 were collected. The 12% bonds payable were issued on February 28, 2017, at 97. They mature on February 28, 2027. The company uses the straight-line method to amortize bond premiums and discounts