Looking for help with an assignment? Connect with an assignment Expert Now!

Prepare entries necessary to classify the amounts into proper accounts

Prepare entries necessary to classify the amounts into proper accounts.

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, $100 par, 200 shares $ 37,400

April 1  U.S. government bonds, 11%, due April 1, 2022, interest payableApril 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, 2012,purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2032                                               $ 54,000

Instructions

(Round all computations to the nearest dollar.)(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all thesecurities are classified as available-for-sale.(b) Prepare the entry to record the accrued interest and the amortization of premium on December31, 2012, using the straight-line method.(c) The fair values of the investments on December 31, 2012, were:

Sharapova Company common stock                  $ 31,800

U.S. government bonds                                        $ 124,700

McGrath Company bonds                                     $ 58,600

SOLUTION

(a) Debt Investments (Available-for-Sale) ………………………….162,000*

Equity Investments (Available-for-Sale) …………………………..37,400

Interest Revenue ($50,000 X .12 X 4/12) …………………………. 2,000

Investments …………………………………………………………………… 201,400*[$110,000 + ($50,000 X 1.04)]

(b)

December 31, 2012

Interest Receivable …………………………………………………………..8,025

Debt Investments (Available-for-Sale) ……………………………… 51

Interest Revenue…………………………………………………………….. 7,974

[Accrued interest[$50,000 X .12 X 10/12 = $5,000

Premium amortization

6/236 X $2,000 = (51)

Accrued interest[$110,000 X .11 X 3/12 = 3,025

 

All I need to know is how they these numbers for

 

Premium amortization 6/236? 

6/236 because I don’t understand how they got those numbers McGrath Company 12% bonds, par $50,000, dated March 1, 2012,

purchased at 104 plus accrued interest, interest payableannually on March 1, due March 1, 2032
…………………………….

 

54,000

Prepare entries necessary to classify the amounts into proper accounts

Get a Quick Quote

Approximately 250 words
Total price (USD) $: 10.99

Pressed for time on your upcoming paper? We can help!

Bored with homework

Reviews from Clients who Ordered from Our Website

Why Us?

Quality

We use grammar & plagiarism softwares and a Quality Assurance Editing Team to ensure you get a ready to submit paper

Fast

We understand how tight deadlines can get and are always eager to work and beat tight deadlines

Revision

To deliver the best results we offer endless revisions to ensure you get just what they asked for

Personalised

You get to chat and interact with the writer to ensure the paper meets all standard requirements

How it Works

Place an Order

Provide your contact information, select an order type, and describe your requirements. This isn’t going to take long!

Image showing step 1 of making an order
Image showing how to make payment for your order

Select an Appropriate Writer

We’ll match your specifications with our available authors after we have all of the relevant information concerning your order.

Image showing how to download your completed results

Enjoy the End Product

One of our specialists will fulfill your purchase according to your specifications so that you are happy with the end result.