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Cardinal Paz Corp

Price: $2.50

P17-3 (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


Feb. 1, 2012 Sharapova Company common stock, $100 par, 200 shares $ 37,400
April 1 U.S. government bonds, 11%, due April 1, 2022, 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, 2012,
purchased at 104 plus accrued interest, interest payable
annually on March 1, due March 1, 2032 54,000

(Round all computations to the nearest dollar.)
(a) Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities
are classified as available-for-sale.
(b) Prepare the entry to record the accrued interest and the amortization of premium on December 31,
2012, using the straight-line method

(c) The fair values of the investments on December 31, 2012, were:
Sharapova Company common stock $ 31,800
U.S. government bonds 124,700
McGrath Company bonds 58,600
What entry or entries, if any, would you recommend be made?

(d) The U.S. government bonds were sold on July 1, 2013, for $119,200 plus accrued interest. Give the
proper entry.

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