Question

Amalgamated General Corporation is a consulting firm that also offers financial services through its credit division. From time to time the company buys and sells securities. The following selected transactions relate to Amalgamated's investment activities during the last quarter of 2021 and the first month of 2022. The only securities held by Amalgamated at October 1, 2021 were $30 million of 10% bonds of Kansas Abstractors, Inc., purchased on May 1, 2021 at face value and held in Amalgamated's trading securities portfolio. The company's fiscal year ends on December 31. 2021 Oct. 18 Purchased 2 million shares of Millwork Ventures Company common stock for $58 million. Millwork has a total of 30 million shares issued. 31 Received semiannual interest of $1.5 million from the Kansas Abstractors bonds. Nov. 1 Purchased 10% bonds of Holistic Entertainment Enterprises at their $18 million face value, to be held until they mature in 2031. Semiannual interest is payable April 30 and October 31. 1 Sold the Kansas Abstractors bonds for $28 million because rising interest rates are expected to cause their fair value to continue to fall. No unrealized gains and losses had been recorded on these bonds previously. Dec. 1 Purchased 12% bonds of Household Plastics Corporation at their $60 million face value, to be held until they mature in 2031. Semiannual interest is payable May 31 and November 30. 20 Purchased U. S. Treasury bonds for $5.6 million as trading securities, hoping to earn profits on short-term differences in prices. 21 Purchased 4 million shares of NXS Corporation's 50 million shares of common stock for $44 million, planning to hold these shares until market conditions encourage their sale. 23 Sold the Treasury bonds for $5.7 million. 29 Received cash dividends of $3 million from the Millwork Ventures Company shares of common stock. 31 Recorded any necessary adjusting entries relating to the investments. The market price of the Millwork Ventures Company common stock was $27.50 per share and $11.50 per share for the NXS Corporation common stock. The fair values of the bond investments were $58.7 million for Household Plastics Corporation and $16.7 million for Holistic Entertainment Enterprises. 2022 Jan. 7 Sold the NXS Corporation common stock shares for $43 million. Required: Prepare the appropriate journal entry for each transaction or event. Use one summary entry on December 31 to adjust the portfolio of equity investments to fair value. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).)

Answer 1

entry for every Ansy the appropriate sournal transaction is as follows: Date Particulars Mon C omitans) C$ in mtttion Anot (Dr) Amt CGS October 18 investroent in shares of mill work ventures ale or TO cash alc (To record investment of shares) 58 0 Shares October 31 cash al or To investment revenues (To record the revenue investime ht) November I Investment in holistic bonds are TO cash (To record the lovestment) November 1 cash at D as The loss on sale Dranda l To investment on bonds (To record the loss & Investon, in on to it 60 Investment in 12't household bonds al D. TO cash ac (to record the transadion) n o 10 x 5. 6 Dec 26 Investment is To cash us bonds afc 5.6 (To record usbonds)

Dec 21 44 4744 Investment is nxs shares / Investment To cash al (To record Nxs shares) Dec 23 5.7 cash al D To investoint in Us bonds To orain on sales (To record the investrial & Gain). I cash ale - To Investment Revenue e to record the revenue) Dec 29 Dec 31 . Investment revenue reair 0.3 able from holistic a asx 10/82/12 Investment from house hold 10.6 @ 60 x 12.7 x 1/10 To Investment revonne 0.9 (To record the transaction) Adjustment entries we Dec a z u realiazed Grain / losses @2x 27.5-58 To fair value fair value adjustment Tu net holding Gain Ilosses Dec 31

closing entries Amt Ant Dale - Particulass net holding gainstoons & Investment @ 8-115009 acc. Gain on sale o investment yo 0.1 loss on sale of Investment To TO 5.5 Income Jant Cash ale Dr e oss on sale or To Investment in Nx S