Reference no: EM132943061

Question - Read the following case and then use your knowledge, skills and critical thinking to answer the questions below:

You are hired to work as an accountant at Canadian Company which has an active trading strategy for debt investments. Canadian Company engaged in purchasing and selling several debt investments to make profits. On December 31, 2018, the company had 3 debt investments as follows:

Ottawa Company 7% Bonds, the amortized cost is $620,000.

Montreal Company 8% Bonds, the amortized cost is $1,050,000.

Toronto Company 6% Bonds, the amortized cost is $830,000.

If the market values of Ottawa Company, Montreal Company, and Toronto Company debt investments on December 31, 2018 were, $608,000, $1,076,000, $826,000, respectively.

Required - Assume that Canadian Company sold Montreal Company 8% Bonds on April 1, 2019 for $1,038,000 at that time the amortized cost was $1,042,000. Prepare the journal entry to record this transaction.