Question

Problem 17-3

Monty 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, 2017		Sharapova Company common stock, $120 par, 240 shares		$34,200
April 1		U.S. government bonds, 11%, due April 1, 2027, interest payable April 1 and October 1, 108 bonds of $1,000 par each		108,000
July 1		McGrath Company 12% bonds, par $49,800, dated March 1, 2017, purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2037		53,784

Your answer is partially correct. Try again. Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2017, 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 o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 Interest Receivable 8348 T Debt Investments T Interest Revenue 8297 Your answer is partially correct. Try again. The fair values of the investments on December 31, 2017, were: Sharapova Company common stock U.S. government bonds McGrath Company bonds $31,300 135,700 62,600 What entry, if any, would you recommend be made? (Round answers to o 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 o for the amounts.)

Answer 1

Date	Account titles	Debit	Credit
Dec 31,2017	Interest Receivable	$7,950
	Debt investments		$51
	Interest Revenues		$7,899
Workings:
Accrued Interest =$49,800*12%*10/12 =$4,980
Premium amportization =$2,000*6/236 =($51)
Accrued Interest =$108,000*11%*3/12 =$2,970
Net Interest revenue =$7,899
Dec 31,2017	Fair value adjustments	$35,659
	Unrealized Holding gain or loss-Equity		$35,659
Workings:
Securities	Cost	Fair value	Unrealized Gain/(Loss)
Sharapova company stock	$34,200	$31,300	-$2,900
US Govt Bonds	$1,08,000	$1,35,700	$27,700
McGrath company bonds[($49,800*1.04)-$51]	$51,741	$62,600	$10,859
Total	$1,93,941	$2,29,600	$35,659