Riverbed 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, 2020		Sharapova Company common stock, $80 par, 160 shares		$38,600
April 1		U.S. government bonds, 12%, due April 1, 2030, interest payable April 1 and October 1, 108 bonds of $1,000 par each		108,000
July 1		McGrath Company 12% bonds, par $48,600, dated March 1, 2020, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2040		52,488

a) Prepare entries necessary to classify the amounts into proper accounts, assuming that the debt 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.)

b) Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2020, 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.)

c) The fair values of the investments on December 31, 2020, were:

Sharapova Company common stock		$32,400
U.S. government bonds		136,200
McGrath Company bonds		53,600

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.)

d) The U.S. government bonds were sold on July 1, 2021, for $129,200 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.)

Answer rating: 100% (QA)

Answer Transaction General Journal Debit Credit a Debt Investments AvailableforSale 1080004860... View the full answer