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 2018 and the first month of 2019. The only securities held by Amalgamated at October 1 were $45 million of 10% bonds of Kansas Abstractors, Inc. purchased on May 1 at face value and held in Amalgamated's trading portfolio. The company's fiscal year! ends on December 31. 2018 Oct. 18 Purchased 2 million preferred shares of Millwork Ventures Company for $72 million. 31 Received semiannual interest of $2.7 million from the Kansas Abstractors bonds. Nov. Purchased 10 bonds of Holistic Entertainment Enterprises at their $66 million face value, to be held until they mature in 2025. Semiannual interest is payable April 30 and October 31. 1 Sold the Kansas Abstractors bonds for $41 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 129 bonds of Household Plastics Corporation at their $70 million face value, to be held until they mature in 2028. Semiannual interest is payable May 31 and November 30. 20 Purchased U. . Treasury bonds for $6.6 million as trading securities, hoping to earn profits on short-term differences in prices. 21 purchased million common shares of NXS Corporation for $64 million, planning to earn profits from dividends on gains it prevailing market conditions encourage sale. 23 Sold the Treasury bonds for $6.9 million. 29 Received canh dividends of $3 million from the Millwork Ventures Company preferred shares. 31 Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Millwork Ventures Company preferred stock was $34.50 per share and $17.50 per share for the Nxs Corporation common. The fair values of the bond investments were $63.7 million for Household Plastics Corporation and $17. million for Holistic Entertainment Enterprises. 2019 Jan. 7 sold the NXS Corporation common shares for $60 million. Required: Prepare the appropriate journal entry for each transaction or event (If no entry is required for a transaction/event, select "No lournal entry required in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to decimal place, (i.e., 5,500,000 should be entered as 5.5).) View transaction ist

Answer 1

Journal entries:

				Amount in $millions
Date		Accounts	Ref.	Debit	Credit
2018
Oct	18	Preferred shares of Millwork Ventures company		$          72.0
		Cash			$          72.0
		Bought 2 million preference shares of Millwork ventures
	31	Cash		$            2.7
		Interest income			$            2.7
		received semi annual interest from kansas abstractors securities
Nov	1	10% bonds of Holistic Entertainment		$          66.0
		Cash			$          66.0
		Bought 10% bonds at face value
		Securities fair value adjustment account		$            4.0
		Kansas abstractor bonds			$            4.0
		Kansas bond fair valued
		Cash		$          41.0
		Kansas Abstractors bonds			$          41.0
		Sold kansas abstractors bond at loss
Dec	1	12% bonds of Household plastic corporation		$          70.0
		Cash			$          70.0
		Bought securities
	20	U.S Treasury bonds		$            6.6
		Cash			$            6.6
		Purchase U.S. Treasury bonds
	21	Shares of NXS corporation		$          64.0
		Cash			$          64.0
		Bought shares of NXS corporation
	23	U.S Treasury bonds		$            0.3
		Securities fair value adjustment account			$            0.3
		U.S treasury bonds fair valued
	23	Cash		$            6.9
		U.S Treasury bonds			$            6.9
		Sold U.S Treasury bonds
	29	Cash		$            3.0
		Dividend income			$            3.0
		Received dividend income on Millwork ventures securities
	31	Interest receivable		$            1.1
		Interest income			$            1.1
		Accrued interest on 10% Holistic Bonds for 2 months
		Interest receivable		$            0.7
		Interest income			$            0.7
		Accrued interest on 10% Household Plastic bonds for 1month
		Securities fair value adjustment account		$            3.0
		Preferred shares of Millwork Ventures company			$            3.0
		Decrease in securities value adjusted
		Shares of NXS corporation		$            6.0
		Securities fair value adjustment account			$            6.0
		Increase in securities value adjusted
2019	7	Securities fair value adjustment account		$          10.0
Jan		Shares of NXS corporation			$          10.0
		Decrease in securities value adjusted on date of sale
		Cash		$          60.0
		Shares of NXS corporation			$          60.0
		Sale of shares of NXS corporation

Note 1: The changes in fair values are adjusted through securities fair value adjustment account

Note 2: The changes in fair values of bonds which will be held till maturity need not be adjusted