Account Titles and Explanation Debit Credit Date Account Titles and Explanation

Question

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

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.
Feb. 1, 2014 Sharapova Company common stock, $113 par, 226 shares $45,800 April 1 U.S. government bonds, 10%, due April 1, 2024, interest payable April 1 and October 1, 113 bonds of $1,000 par each 113,000 July 1 McGrath Company 12% bonds, par $53,600, dated March 1, 2014, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2034 57,888
(a) 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

(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2014, 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, 2014

(c) The fair values of the investments on December 31, 2014, were:
Sharapova Company common stock $32,170 U.S. government bonds 145,550 McGrath Company bonds 62,330
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, 2014

(d) The U.S. government bonds were sold on July 1, 2015, for $119,480 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, 2015

Explanation / Answer

a) Journal entry

(113,000 + 53,600*1.04 = 168,744)

b)

Accured interest 53,600*.12*10/12                          $5,360

Premium amortisation 6/236*2144                                (55)

Accrued interest

(113,000*.10 *3/12)                                                   $2,825

                                                                                  $8,130

c) dec 31,2014

Avialabel for sale portfolio

Journal entry

(d)

Debt investment (avialable for sale) $168,744 Equity investment     45,800 Interest revenue(53,600*.12*4/12)       2,144 To Investments $216,688

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