P17-3 (Available for sale investments) Cardinal Paz Corp. carries - A+++

Problem 17-3 (Available for sale investments) 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, 2010 Sharapova Company common stock, $100 par, 200 shares $37,400

April 1 U.S. government bonds, 11% due April 1, 2020, interest payable April 1 and October 1, 110 bonds of $1000 par each $110,000

July 1 McGrath Company 12% bonds, par $50,000, dated March 1, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030 $54,000

Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available-for-sale
Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2010, using the straight line method.

The fair values of the securities on December 31, 2010, were:
Sharapova Company common stock $31,800
US government bonds $124,700
McGrath Company bonds $58,600
What entries, if any, would you recommend be made?

The US government bonds were sold on July 1, 2011, for $119,200 plus accrued interest. Give the proper entry.

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