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Manal Elkhoshkhany, Bachelor's Degree
Category: Multiple Problems
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Experience:  Completed by BA degree in 1988 and graduated with a GPA of 4.0
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# Homework Help for Accounting

### Customer Question

Due Sunday 7/15/12  by 5pm PST

(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 descriptions. Feb. 1, 2010 Sharapova Company common stock, \$100 par, 200 shares \$37,400 April 1 U.S. government bonds, 11%, due April 1, 2020, 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, 2010 purchased at 104 plus accrued interest, interest payable annually on March 1, due March 1, 2030 54,000 Prepare entries necessary to classify the amounts into proper accounts, assuming that all the securities are classified as available-for-sale. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit Prepare the entry to record the accrued interest and the amortization of premium on December 31, 2010, using the straight-line method. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round computations to 3 decimal places, e.g. 12.252 and the final answers to zero decimal places, e.g. 12,510.) Description/Account Debit Credit The fair values of the securities on December 31, 2010, 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? (Round answers to 0 decimal places, e.g. 25,000.) Description/Account Debit Credit The U.S. government bonds were sold on July 1,2011, for \$119,200 plus accrued interest. Give the proper entry. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit
The categories that were available for debit and credits on the above problem are available for sale securities, investments, unrealized holding gain or loss equity, cash, interest receivable, sec fair value adjust (avail for sale), gain on sale of securities, interest revenue.

and Question 4 (Fair Value and Equity Methods) Brooks Corp. is a medium-sized corporation specializing in quarrying stone for building construction. The company has long dominated the market, at one time achieving a 70% market penetration. During prosperous years, the company's profits, coupled with a conservative dividend policy, resulted in funds available for outside investment. Over the years, Brooks has had a policy of investing idle cash in equity securities. In particular, Brooks has made periodic investments in the company's principal supplier, Norton Industries. Although the firm currently owns 12% of the outstanding common stock of Norton Industries, Brooks does not have significant influence over the operations of Norton Industries. Cheryl Thomas has recently joined Brooks as assistant controller, and her first assignment is to prepare the 2010 year-end adjusting entries for the accounts that are valued by the “fair value” rule for financial reporting purposes. Thomas has gathered the following information about Brooks' pertinent accounts. Brooks has trading securities related to Delaney Motors and Patrick Electric. During this fiscal year, Brooks purchased 100,000 shares of Delaney Motors for \$1,400,000; these shares currently have a market value of \$1,600,000. Brooks' investment in Patrick Electric has not been profitable; the company acquired 50,000 shares of Patrick in April 2010 at \$20 per share, a purchase that currently has a value of \$720,000. Prior to 2010, Brooks invested \$22,500,000 in Norton Industries and has not changed its holdings this year. This investment in Norton Industries was valued at \$21,500,000 on December 31, 2009. Brooks' 12% ownership of Norton Industries has a current market value of \$22,225,000. Prepare the appropriate adjusting entries for Brooks as of December 31, 2010, to reflect the application of the “fair value” rule for both classes of securities described above. Description/Account Debit Credit (Investment in trading securities.) (Investment in available-for-sale securities.) Prepare the entries for the Norton investment, assuming that Brooks owns 25% of Norton's shares. Norton reported income of \$500,000 in 2010 and paid cash dividends of \$100,000. Description/Account Debit Credit Cash

the debit and credit categories on the second problem are interest revenue, unrealized holding gain or loss equity, cash, investment in NOrton, Sec fair value adjust (training), Unrealized holding gain or loss income, sec fair value adjust (avail for sale)

Can you please show me how you reach the steps so I can learn from this as I would from a tutor please.
Submitted: 2 years ago.
Category: Multiple Problems
Expert:  Manal Elkhoshkhany replied 2 years ago.

Hello boots

https://www.box.com/s/d9f59d032eed70051c63

P.S. If you like my services, please feel free to direct your future posts to me specifically by typing "For BusinessTutor" at the beginning of your post. Should you choose to do this, please try to allow me 48 hours before the deadline. If you need to meet me online for a timed assignment, please advise me of the date and time (EST) you want me to meet you here and I will. Please make sure you take the length (and number) of the questions into consideration when making your offer to avoid delays in providing solutions.

Thank you

Manal Elkhoshkhany, Bachelor's Degree
Satisfied Customers: 9512
Experience: Completed by BA degree in 1988 and graduated with a GPA of 4.0
Customer: replied 2 years ago.
Can you tell me where the 1.04 came from on answer (a) in the first problem please?
Expert:  Manal Elkhoshkhany replied 2 years ago.

The problem states "McGrath Company 12% bonds, par \$50,000, dated March 1, 2010 purchased at 104 plus accrued interest"

Regards,

Expert:  Manal Elkhoshkhany replied 2 years ago.

Hello boots and thank you for requesting me to answer your new post but since you have not typed "For BusinessTutor" at the beginning of the post, another expert has posted a solution. For future posts, please remember to type "For BusinessTutor" at the beginning of the post.

Thank you

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