P13-1A Davison Carecenters Inc. provides financing and capital to the health-care industry, with a particular focus on nursing homes for the elderly. The following selected transactions relate to bonds acquired as an investment by Davison, whose fiscal year ends on December 31. 2008 Jan. 1 Purchased at par $2,000,000 of Hannon Nursing Centers, Inc., 10-year, 8% bonds dated January 1, 2008, directly from Hannon. July 1 Received the semiannual interest on the Hannon bonds. Dec. 31 Accrual of interest at year-end on the Hannon bonds. (Assume that all intervening transactions and adjustments have been properly recorded and that the number of bonds owned has not changed from December 31, 2008, to December 31, 2010.) 2011 Jan. 1 Received the semiannual interest on the Hannon bonds. Jan. 1 Sold $1,000,000 Hannon bonds at 106. The broker deducted $6,000 for commissions and fees on the sale. July 1 Received the semiannual interest on the Hannon bonds. Dec. 31 Accrual of interest at year-end on the Hannon bonds. Journalize the listed transactions for the years 2008 and 2011. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date Account / Description Debit Credit 2008 Jan.1 $ $ July1 $ $ Dec. 31 $ $ 2011 Jan. 1 $ $ Jan. 1 $ $ $ July 1 $ $ Dec. 31 $ $ Assume that the fair value of the bonds at December 31, 2008, was $2,200,000. These bonds are classified as available-for-sale securities. Prepare the adjusting entry to record these bonds at fair value. Date Account / Description Debit Credit Dec. 31 $ $ Based on your analysis in part (b) of the question, show the balance sheet presentation of the bonds and interest receivable at December 31, 2008. Assume the investments are considered long-term. Balance Sheet $ $ The unrealized gain or loss would reported in the section of the . P13-3A On December 31, 2008, Ramey Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee. Common Stock Shares Cost Hurst Co. 2,000 $60,000 Pine Co. 5,000 45,000 Scott Co. 1,500 30,000 On December 31, 2008, the total fair value of the securities was equal to its cost. In 2009, the following transactions occurred. July 1 Received $1 per share semiannual cash dividend on Pine Co. common stock. Aug. 1 Received $0.50 per share cash dividend on Hurst Co. common stock. Sept. 1 Sold 1,500 shares of Pine Co. common stock for cash at $8 per share, less brokerage fees of $300. Oct. 1 Sold 800 shares of Hurst Co. common stock for cash at $33 per share, less brokerage fees of $500. Nov. 1 Received $1 per share cash dividend on Scott Co. common stock. Dec. 15 Received $0.50 per share cash dividend on Hurst Co. common stock. Dec. 31 Received $1 per share semiannual cash dividend on Pine Co. common stock. At December 31, the fair values per share of the common stocks were: Hurst Co. $32, Pine Co. $8, and Scott Co. $18. Journalize the 2009 transactions and post to the account Stock Investments. (Use the T-account form.) (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Date Account / Description Debit Credit July 1 $ $ Aug. 1 $ $ Sept. 1 $ $ $ Oct. 1 $ $ $ Nov. 1 $ $ Dec. 15 $ $ Dec. 31 $ $ Stock Investments 2009 2009 Jan. 1 Balance Sept. 1 Oct. 1 Dec. 31 Balance Prepare the adjusting entry at December 31, 2009, to show the securities at fair value. The stock should be classified as available-for-sale securities. Date Account / Description Debit Credit Dec. 31 $ $ Show the balance sheet presentation of the investments at December 31, 2009. At this date, Ramey Associates has common stock $1,500,000 and retained earnings $1,000,000. (If there is a loss, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Balance Sheet Investments $ Stockholders' Equity $ Total paid-in capital and retained earnings Less: Total stockholders equity $