The following transactions relate to Portland Cement Ltd.'s investment in the debt securities of Widget Makers Inc. during 2017 and 2018. Portland is a public company and purchased the investment to earn interest income.
2017
Jan. 1 Purchased $120,000 of Widget Makers Inc. eight-year, 7% bonds for $135,666, to yield a market interest rate of 5%. Interest is payable semi-annually on July 1 and January 1.
July 1 Received semi-annual interest on Widget Makers' bonds.
Dec. 1 Accrued interest at Portland's year end.
2018
Jan. 1Recorded receipt of interest payment from bonds.
July 1 Recorded receipt of interest payment from bonds.
2 Sold the bonds on the open market for $131,000.
Instructions
(a) Record the above transactions. (Round all amounts to the nearest dollar.)
(b) What is the balance in the investment account on December 31, 2017?