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Prepare entries necessary to classify amounts into accounts

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Reference no: EM13491820

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, 2010 Sharapova Company common stock, $100 par, 200 shares             $37,400

April 1  U.S. government bonds, 11% due April 1, 2020, interest payable April 1 and October 1, 110 bonds of $1,000 par each $110,000

July 1  McGrath company 12% bonds, par $50,000, dated March 1, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030 $54,000

(Round all computations to the nearest dollar)

a. Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available-for-sale.

b. Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2010 using the straight-line method.

c. The fair values of the securities on December 31, 2010 were:

a. Sharapova Company common stock        $31,800

b. U.S. government bonds                                                $124,700

c. McGrath Company bonds                            $58,600

d. The U.S. government bonds were sold July 1, 2011, for $119,200 plus accrued interest.

Reference no: EM13491820

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