Problem 17-03 Cardinal Paz Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions. $37,400 Feb. 1, 2020 April 1 Sharapova Company common stock, $100 par, 200 shares U.S. government bonds, 11%, due April 1, 2030, interest payable April 1 and October 1, 110 bonds of $1,000 par each McGrath Company 12% bonds, par $50,000, dated March 1, 2020, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2040 110,000 July 1 54,000 Your answer is correct. Prepare entries necessary to classify the amounts into proper accounts, assuming that the debt securities are classified as available-for-sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Debit Credit Debt Investments 162,000 TEquity Investments T 37,4007 37,400 T Tinterest Revenue 2,000 T Investment 201,400 Your answer is correct. Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2020, using the straight-line method. (Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 2020 Interest Receivable 8,025T Debt Investments 51 - Interest Revenue 7,974 Your answer is partially correct. Try again. The fair values of the investments on December 31, 2020, were: Sharapova Company common stock U.S. government bonds McGrath Company bonds $31,800 124,700 58,600 What entry, if any, would you recommend be made? (Round answers to o decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Debit Credit Date Account Titles and Explanation Dec. 31, 2020 Dec. 31, 2020 Fair Value Adjustment 15,751 Unrealized Holding Gain or Loss -Income 15,751 | (Entry for debt investment) I Fair Value Adjustment 15,751 Unrealized Holding Gain or Loss - Equity 15,751 (Entry for equity investment) Your answer is correct. The U.S. government bonds were sold on July 1, 2021, for $119,200 plus accrued interest. Give the proper entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Debit Credit Date Account Titles and Explanation Jul. 1, 2021 Cash 122,225 Debt Investments 110,000 Gain on Sale of Investments 9,200 Interest Revenue 3,025
