Case $-2$

$(25$ marks$)$

Sharjah Electronics Limited is a publicly$-$traded corporation that specializes in manufacturing and distributing consumer electronics. In order to maximize its returns on surplus cash, the company decides to invest in available$-$for$-$sale securities$.($Available$-$for$-$sale securities are financial instruments that the company intends to hold for an indefinite period but may sell if the need arises or if market conditions are favorable$).$ Shajah Electronics doesnot have significant influence in the investee companies. The details of the investments are given below.

Purchase Investment Details$01/07/2021$ Purchased State Bank of India $12\%,3-$year bonds for $$1,333,266$ to yield aneffective interest rate of $14\%.$ The issue price of the bonds is $1,400,000\mathrm{.}01/07/2021$ Purchased $$3,000,000$ worth common stock of Reliance Industries Limited$\mathrm{.}01/07/2021$ Purchased $$2,000,000$ worth common stock of Dubai Consultancy ServicesLimited.Investment Revenue Details$31/12/2021$ Received a semi$-$annual cash interest payment from State Bank of India$\mathrm{.}31/12/2021$ Received a cash dividend of $$150,000$ from Reliance Industries Limited$\mathrm{.}31/12/2021$ Dubai Consultancy Services Limited does not pay any dividend.

Adjust Investment to fair value$31/12/2021$ Valued the State Bank of India bonds at $$1,429,886\mathrm{.}31/12/2021$ Valued the Reliance Industries Limited Common stock at $$2,900,00031/12/2021$ Valued the Dubai Consultancy Services Limited Common Stock at $$1,980,000$

$\backslash$table$[[$Sale of Investments$],[\frac{01}{15}\frac{?}{2022},$Sold State Bank of India bonds for $$1,450,000.],[\frac{01}{15}\frac{?}{2022},$Sold Dubai Consultancy Services Limited Common Stock for $$2,892,000.]]$

Required

Record the purchase of investments by passing journal entries in the books of Sharjah Electronics Limited. $(7$ marks$)$

Record the receipt of investment revenue by passing journal entries in the books of Sharjah Electronics Limited. $(5$ marks$)$

Adjustment of Available for Sale Investment to Fair Value as on $31/12/2021(2$ marks$)$

Pass journal entries to record united unrealized holding gain$/$ loss. $(4$ marks$)$

Pass journal entries to record the sale of investments. $(7$ marks$)$