Prepare the entry to record the accrued interest and the

Reference no: EM13567998

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, 2012 Sharapova Company common stock, $106 par, 212 shares $46,000

April 1 U.S. government bonds, 12%, due April 1, 2022, interest payable April 1 and October 1, 111 bonds of $1,000 par each 111,000

July 1 McGrath Company 12% bonds, par $52,400, dated March 1, 2012, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2032 56,592

(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, 2012, using the straight-line method.

Sharapova Company common stock $33,530

U.S. government bonds 149,930

McGrath Company bonds 58,680

What entry or entries, if any, would you recommend be made?

(d) The U.S. government bonds were sold on July 1, 2013, for $119,900 plus accrued interest. Give the proper entry.

Reference no: EM13567998

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