Problem 17-3 Cardinal Paz Corp. carries an account in its general ledger called
ID: 2499510 • Letter: P
Question
Problem 17-3
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.
(a) 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.)
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2014, using the straight-line method. (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.)
(c) The fair values of the investments on December 31, 2014, were:
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.)
(d) The U.S. government bonds were sold on July 1, 2015, for $119,740 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.)
Acct. Titles and Explanation Debit CreditExplanation / Answer
Here No Amount description is given in the detail, So just prepare proforma for same.
(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, 2014, using the straight-line method
(c) The fair values of the investments on December 31, 2014, were: What entry, if any, would you recommend be made?
d) The U.S. government bonds were sold on July 1, 2015, for $119,740 plus accrued interest. Give the proper entry.
Acct. Titles and Explanation Debit Credit Debt Investment Dr xxx Equity Investment Dr xxx Interest Revenue Dr xxx To Total Investment xxx