Presented below are selected transactions regarding investment for Cardinal Paz Corp. Cardinal Paz Corp. classified these investments as trading. Feb. 1, 2022 Purchased Sharapova Company ordinary shares, $100 par, 200 shares at a purchase price $37,600. April 1 Purchased government bond, 11 percent, due April 1, 2028, interest payable April 1 and October 1, 110 bonds of $1,000 par each (Assume: par bond) July 1 McGrath Company 12 percent bonds, par $50,000, dated March 1, 2022 purchased at $52,000, interest payable annually on March 1, due March 1, 2042. The fair value of the investment on December 31, 2022 were: Sharapova Company $31,800 Government bonds 124,700 McGrath Company bonds 58,600 Instructions a. Prepare journal entries that should be made in 2022 to record the purchase of these investments. b. Prepare journal entries to record the accrued interest on December 31, 2022 (Please ignore the amortization of premium) c. At the end of 2022, what entries (if any) would you recommend be made? d. The government bonds were sold on July 1, 2023, for $119,200 plus accrued interest revenue for 2023. Give the proper entry.
Presented below are selected transactions regarding investment for Cardinal Paz Corp. Cardinal Paz Corp. classified these investments as trading.
Feb. 1, 2022 Purchased Sharapova Company ordinary shares, $100 par, 200 shares at a purchase price $37,600.
April 1 Purchased government bond, 11 percent, due April 1, 2028, interest payable April 1 and October 1, 110 bonds of $1,000 par each (Assume: par bond) July 1 McGrath Company 12 percent bonds, par $50,000, dated March 1, 2022 purchased at $52,000, interest payable annually on March 1, due March 1, 2042.
The fair value of the investment on December 31, 2022 were:
Sharapova Company $31,800
Government bonds 124,700
McGrath Company bonds 58,600
Instructions
a. Prepare
b. Prepare journal entries to record the accrued interest on December 31, 2022 (Please ignore the amortization of premium)
c. At the end of 2022, what entries (if any) would you recommend be made?
d. The government bonds were sold on July 1, 2023, for $119,200 plus accrued interest revenue for 2023. Give the proper entry.
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