Prepare the entry to record the accrued interest and the

Assignment Help Accounting Basics

Reference no: EM13583973

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, $116 par, 232 shares	$37,600
April 1	U.S. government bonds, 10%, due April 1, 2022, interest payable April 1 and October 1, 113 bonds of $1,000 par each	113,000
July 1	McGrath Company 12% bonds, par $50,000, dated March 1, 2012, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2032	54,000

(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		$32,760
U.S. government bonds		146,150
McGrath Company bonds		67,710

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

(d) The U.S. government bonds were sold on July 1, 2013, for $120,250 plus accrued interest. Give the proper entry.

Reference no: EM13583973

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