AC301 Unit 10 Wiley

Brief Exercise 17-8
 
 	Your answer is correct.
 	 
Cleveland Company has a stock portfolio valued at $8,620 (available-for-sale). Its cost was $8,160. If the Fair Value Adjustment account has a debit balance of $241, prepare the journal entry at year-end. (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
  
  
  

  
  
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.
Feb. 1, 2014		Sharapova Company common stock, $116 par, 232 shares		$45,500
April 1		U.S. government bonds, 12%, due April 1, 2024, interest payable April 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, 2014, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2034		54,000

(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.)
Account Titles and Explanation	Debit	Credit
  
  
  

  
  
  

  
  
  

  
  
  


(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.)
Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2014	  
  
  

	  
  
  

	  
  
  


(c) The fair values of the investments on December 31, 2014, were:
Sharapova Company common stock		$33,230
U.S. government bonds		148,440
McGrath Company bonds		63,070

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, 2014	  
  
  

	  
  
  


(d) The U.S. government bonds were sold on July 1, 2015, for $120,210 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, 2015	  
  
  

	  
  
  

	  
  
  

	  
  
  

  

		



Complete these exercises:

Brief Exercise 17-8



Problem 17-3