Question
Sweet Corp. carries an account in its general ledger called Investments, which contained debits for investment purchases, and no credits, with the following descriptions. Feb.
Sweet 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, 2020 | Sharapova Company common stock, $120 par, 240 shares | $40,300 | ||
April 1 | U.S. government bonds, 11%, due April 1, 2030, interest payable April 1 and October 1, 108 bonds of $1,000 par each | 108,000 | ||
July 1 | McGrath Company 12% bonds, par $45,000, dated March 1, 2020, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2040 | 48,600 |
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 0 for the amounts.)
Account Titles and Explanation | Debit | Credit |
Unrealized Holding Gain or Loss - EquityInterest ReceivableInterest RevenueCashUnrealized Holding Gain or Loss - IncomeEquity InvestmentsNo EntryDebt InvestmentsInvestmentGain on Sale of InvestmentsFair Value Adjustment | ||
InvestmentFair Value AdjustmentGain on Sale of InvestmentsUnrealized Holding Gain or Loss - EquityEquity InvestmentsUnrealized Holding Gain or Loss - IncomeInterest ReceivableCashInterest RevenueNo EntryDebt Investments | ||
Debt InvestmentsCashUnrealized Holding Gain or Loss - IncomeGain on Sale of InvestmentsUnrealized Holding Gain or Loss - EquityInterest ReceivableNo EntryInvestmentInterest RevenueFair Value AdjustmentEquity Investments | ||
No EntryInterest RevenueUnrealized Holding Gain or Loss - EquityInterest ReceivableEquity InvestmentsGain on Sale of InvestmentsDebt InvestmentsFair Value AdjustmentUnrealized Holding Gain or Loss - IncomeCashInvestment |
List of Accounts
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 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31, 2020 | Gain on Sale of InvestmentsUnrealized Holding Gain or Loss - IncomeInvestmentInterest RevenueDebt InvestmentsEquity InvestmentsCashUnrealized Holding Gain or Loss - EquityNo EntryInterest ReceivableFair Value Adjustment | ||
No EntryUnrealized Holding Gain or Loss - IncomeUnrealized Holding Gain or Loss - EquityInvestmentGain on Sale of InvestmentsCashEquity InvestmentsDebt InvestmentsInterest ReceivableFair Value AdjustmentInterest Revenue | |||
CashInterest RevenueGain on Sale of InvestmentsInvestmentDebt InvestmentsFair Value AdjustmentInterest ReceivableUnrealized Holding Gain or Loss - EquityUnrealized Holding Gain or Loss - IncomeEquity InvestmentsNo Entry |
List of Accounts
The fair values of the investments on December 31, 2020, were:
Sharapova Company common stock | $31,600 | |
U.S. government bonds | 113,200 | |
McGrath Company bonds | 55,700 |
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, 2020 | No EntryFair Value AdjustmentInterest ReceivableCashGain on Sale of InvestmentsUnrealized Holding Gain or Loss - IncomeDebt InvestmentsInvestmentInterest RevenueUnrealized Holding Gain or Loss - EquityEquity Investments | ||
CashNo EntryInterest ReceivableInterest RevenueUnrealized Holding Gain or Loss - EquityUnrealized Holding Gain or Loss - IncomeGain on Sale of InvestmentsInvestmentDebt InvestmentsEquity InvestmentsFair Value Adjustment | |||
(Entry for debt investment) | |||
Fair Value AdjustmentNo EntryInvestmentInterest ReceivableUnrealized Holding Gain or Loss - IncomeEquity InvestmentsGain on Sale of InvestmentsCashInterest RevenueUnrealized Holding Gain or Loss - EquityDebt Investments | |||
No EntryCashEquity InvestmentsUnrealized Holding Gain or Loss - EquityInterest ReceivableInterest RevenueFair Value AdjustmentGain on Sale of InvestmentsInvestmentUnrealized Holding Gain or Loss - IncomeDebt Investments | |||
(Entry for equity investment) |
List of Accounts
The U.S. government bonds were sold on July 1, 2021, for $114,000 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 0 for the amounts.)
Date | Account Titles and Explanation | Debit | Credit |
Jul. 1, 2021 | Unrealized Holding Gain or Loss - EquityInvestmentCashUnrealized Holding Gain or Loss - IncomeFair Value AdjustmentNo EntryInterest RevenueInterest ReceivableDebt InvestmentsEquity InvestmentsGain on Sale of Investments | ||
Interest RevenueUnrealized Holding Gain or Loss - IncomeEquity InvestmentsNo EntryInterest ReceivableCashInvestmentGain on Sale of InvestmentsUnrealized Holding Gain or Loss - EquityDebt InvestmentsFair Value Adjustment | |||
Unrealized Holding Gain or Loss - IncomeNo EntryCashInterest RevenueEquity InvestmentsGain on Sale of InvestmentsInterest ReceivableUnrealized Holding Gain or Loss - EquityDebt InvestmentsInvestmentFair Value Adjustment | |||
Unrealized Holding Gain or Loss - IncomeGain on Sale of InvestmentsFair Value AdjustmentInterest ReceivableNo EntryEquity InvestmentsUnrealized Holding Gain or Loss - EquityInvestmentInterest RevenueDebt InvestmentsCash |
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