Question

Problem 17-3 Sweet 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, 2017 Sharapova Company common stock, $80 par, 160 shares $38,500 April 1 U.S. government bonds, 12%, due April 1, 2027, interest payable April 1 and October 1, 108 bonds of $1,000 par each 108,000 July 1 McGrath Company 12% bonds, par $53,300, dated March 1, 2017, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2037 57,564

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.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2017, 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.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

The fair values of the investments on December 31, 2017, were: Sharapova Company common stock $30,700 U.S. government bonds 130,500 McGrath Company bonds 56,000 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.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 (Entry for debt investment) (Entry for equity investment) SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT

The U.S. government bonds were sold on July 1, 2018, for $127,300 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.) Date Account Titles and Explanation Debit Credit Jul. 1, 2018

Answer 1

a)	Available for sale securities	2,01,932
	Interest revenue (53,300*0.12*4/12)	2,132
	Investments		2,04,064
	( 108000+ 53300*1.04)	163432
	Debt investment available for sale 1,63,432 + Equity Investment ( Available for sale) 38500
	Available for Sale	2,01,932
b)	Interest Recievable	8,570
	Interest Revenue		8,516
	Debt Investment ( Available for Sale)		54
	Accrued Interest
	53300*0.12*10/12	5330
	Premium Amortisation
	6/236*2132	-54
	Accrued Interest
	108000*0.12*3/12	3240
		8,516