Reference no: EM132588746

Culver 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, 2017                  Sharapova Company common stock, $120 par, 240 shares $40,800

April 1                          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

July 1                          McGrath Company 12% 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

Question 1: 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

Question 2: 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

Question 3: The U.S. government bonds were sold on July 1, 2018, for $115,300 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, 2018 Cash

Debt Investments 96000

Gain on Sale Investments

Interest Revenue