Problem 17-3

CulverCorp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions.

Feb.1,2017 Sharapova Company common stock, $120 par,240 shares $40,800

April1 U.S. government bonds,12%, due April 1, 2027, interest payable April 1

and October 1,96 bonds of $1,000 par each 96,000

July1 McGrath Company12% bonds, par $50,100, dated March 1, 2017,

purchased at 104 plus accrued interest, interest payable annually

on March 1, due March 1, 2037 54,108

Prepare entries necessary to classify the amounts into proper accounts, assuming that all the 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 0 for the amounts.)

Account Titles and Explanation Debit Credit

Equity Investments 40800

Interest Revenue 2004

Debt Investments

Investment

The fair values of the investments on December 31, 2017, were:

Sharapova Company common stock$29,300

U.S. government bonds 136,500

McGrath Company bonds 54,900

What entry, if any, would you recommend be made?(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 0 for the amounts.)

Date Account Titles and Explanation Debit Credit

Dec. 31, 2017 Fair Value Adjustment

Unrealized Holding Gain or Loss - Equity

(Entry for debt investment)

?

?

(Entry for equity investment)

The U.S. government bonds were sold on July 1, 2018, for $115,300plus 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 0 for the amounts.)

Date Account Titles and Explanation Debit Credit

Jul. 1, 2018 Cash

Debt Investments 96000

Gain on Sale Investments

Interest Revenue