Amalgamated General Corporation is a consulting firm that also offers financial

Question

Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated’s investment activities during the last quarter of 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $45 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1 at face value and held in Amalgamated’s trading portfolio. The company’s fiscal year ends on December 31.

Required:
Prepare the appropriate journal entry for each transaction or event. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).)

2018 Oct. 18 Purchased 2 million preferred shares of Millwork Ventures Company for $72 million. 31 Received semiannual interest of $2.7 million from the Kansas Abstractors bonds. Nov. 1 Purchased 10% bonds of Holistic Entertainment Enterprises at their $66 million face value, to be held until they mature in 2025. Semiannual interest is payable April 30 and October 31. 1 Sold the Kansas Abstractors bonds for $41 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. Dec. 1 Purchased 12% bonds of Household Plastics Corporation at their $70 million face value, to be held until they mature in 2028. Semiannual interest is payable May 31 and November 30. 20 Purchased U. S. Treasury bonds for $6.6 million as trading securities, hoping to earn profits on short-term differences in prices. 21 Purchased 4 million common shares of NXS Corporation for $64 million, planning to earn profits from dividends or gains if prevailing market conditions encourage sale. 23 Sold the Treasury bonds for $6.9 million. 29 Received cash dividends of $3 million from the Millwork Ventures Company preferred shares. 31 Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Millwork Ventures Company preferred stock was $34.50 per share and $17.50 per share for the NXS Corporation common. The fair values of the bond investments were $63.7 million for Household Plastics Corporation and $17.7 million for Holistic Entertainment Enterprises.

Explanation / Answer

Date

General description

Debit

credit

Oct-18

Purchased 2 Million preferred shares of Milkwork Ventures company for $72Million

Investment in Milkventures preffered shares

$72million

   cash

$72million

Oct-31

Received semi annual interest of $2.7Million from the kansas abstractors Bonds

Cash

$2.7million

   Investment income

$2.7million

Nov-01

Purchased 10%bonds from holistic entertainment bonds

Investment in Holistic Entertainment bonds

$66 million

    cash

$66 million

Nov-01

Sold Kansas abstractors bonds

Cash

$41 million

Loss on sale of investments

$4 Million

    Investment in kansas abstractors bonds

$45 million

Dec-01

Purchased 12% bonds of household plastic corporation

Investment in household plastic bonds

$70 million

    cash

$70 million

Dec-20

Purchased US treasury bonds for $6.6 million as trading securities

Investment in US Treasury bonds

$6.6million

     cash

$6.6million

Dec-21

Purchased 4 Million commonshares Of NXS corporation

Investment in NXS common shares

$64 million

     cash

$64 million

Dec-23

Sold treasury bonds for $6.9million

Cash

$6.9 million

    Investment in US Treasury bonds

$6.6million

    Gain on sale of investments

$0.3 million

Dec-29

Received cash dividend of $3million from Milk ventures company prefred shares

Cash

$3 million

    Investment revenue

$3 million

Dec-31

Accrued interest

Investment revenue receivable - holistic entertainment ($66million*10%*2/12)

$1.1 million

Investment revenue receivable - household plastics ($70million *12%*1/12)

$0.7milliom

      Investment revenue

$1.8 million

Revaluations

Net realized holding gains and losses

$3million

           Fair value adjustment

$3million

[{2million preferred shares *$34.50)-$72million]

Fair value adjusment

$6million

    Net realized holding gains and losses

$6million

[(4million common shares NXScorporation *$17.50 per share)]-$64millio

Net realized holding gains and losses

$6million

Investment revenue [$1.8million + $3million +$2.7million]

$7.5million

Gain on sale of investments

$0.3 million

      Loss on sale of investments

$4 Million

      Income summary (bal fig)

$9.8 million

Jan-07

sold the NXS corporation common shares for $60million

cash

$60million

Loss on sale of investment

$4million

     Investment in NXS common shares

$64 million

Date

General description

Debit

credit

Oct-18

Purchased 2 Million preferred shares of Milkwork Ventures company for $72Million

Investment in Milkventures preffered shares

$72million

   cash

$72million

Oct-31

Received semi annual interest of $2.7Million from the kansas abstractors Bonds

Cash

$2.7million

   Investment income

$2.7million

Nov-01

Purchased 10%bonds from holistic entertainment bonds

Investment in Holistic Entertainment bonds

$66 million

    cash

$66 million

Nov-01

Sold Kansas abstractors bonds

Cash

$41 million

Loss on sale of investments

$4 Million

    Investment in kansas abstractors bonds

$45 million

Dec-01

Purchased 12% bonds of household plastic corporation

Investment in household plastic bonds

$70 million

    cash

$70 million

Dec-20

Purchased US treasury bonds for $6.6 million as trading securities

Investment in US Treasury bonds

$6.6million

     cash

$6.6million

Dec-21

Purchased 4 Million commonshares Of NXS corporation

Investment in NXS common shares

$64 million

     cash

$64 million

Dec-23

Sold treasury bonds for $6.9million

Cash

$6.9 million

    Investment in US Treasury bonds

$6.6million

    Gain on sale of investments

$0.3 million

Dec-29

Received cash dividend of $3million from Milk ventures company prefred shares

Cash

$3 million

    Investment revenue

$3 million

Dec-31

Accrued interest

Investment revenue receivable - holistic entertainment ($66million*10%*2/12)

$1.1 million

Investment revenue receivable - household plastics ($70million *12%*1/12)

$0.7milliom

      Investment revenue

$1.8 million

Revaluations

Net realized holding gains and losses

$3million

           Fair value adjustment

$3million

[{2million preferred shares *$34.50)-$72million]

Fair value adjusment

$6million

    Net realized holding gains and losses

$6million

[(4million common shares NXScorporation *$17.50 per share)]-$64millio

Net realized holding gains and losses

$6million

Investment revenue [$1.8million + $3million +$2.7million]

$7.5million

Gain on sale of investments

$0.3 million

      Loss on sale of investments

$4 Million

      Income summary (bal fig)

$9.8 million

Jan-07

sold the NXS corporation common shares for $60million

cash

$60million

Loss on sale of investment

$4million

     Investment in NXS common shares

$64 million

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