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 $40 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 $63 million. Millwork has a total of 62 million shares issued.
		31		Received semiannual interest of $2.4 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 $37 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 $7.2 million as trading securities, hoping to earn profits on short-term differences in prices.
		21		Purchased 4 million shares of NXS Corporation's 48 million shares of common stock for $48 million, planning to hold these shares until market conditions encourage their sale.
		23		Sold the Treasury bonds for $7.5 million.
		29		Received cash dividends of $9 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 $27.00 per share and $14.00 per share for the NXS Corporation common stock. The fair values of the bond investments were $58.9 million for Household Plastics Corporation and $16.5 million for Holistic Entertainment Enterprises.

2022
Jan.		7		Sold the NXS Corporation common stock shares for $47 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

		($ In Million )
Date	General Journal	Debit	Credit
2021
Oct-18	Investment in Millwork Ventures Common Shares	$ 63
	Cash		$ 63
	(To record 2 Million shares of Millwork ventures)
Oct-31	Cash	$ 2.4
	Interest Revenue		$ 2.4
	(To record Received Semi annual interest of $ 2.4 Million)
Nov-01	Investment in Holistic Entertainment Bonds	$ 18
	Cash		$ 18
	(To record Purchase bonds from Holistic entertainments )
Nov-01	Cash	$ 37
	Loss on Sale of Investment($40 -$37 )	$ 3
	Investment in Kansas Abstractors		$ 40
	(To record sold Kansas Abstractors for $ 37 Million )
Dec-01	Investment in Household Plastics Bonds	$ 60
	Cash		$ 60
	(To record Purchase Households Plastic bonds for $ 60 Million )
Dec-20	Investment in U.S Treasury Bonds	$ 7.2
	Cash		$ 7.2
	(To record purchase U.S Treasury Bonds for $ 7.2 Million )
Dec-21	Investment In NXS Common shares	$ 48
	Cash		$ 48
	(To record purchase 4 Million share NXS Common shares for $ 48 million )
Dec-23	Cash	$ 7.5
	Investment in U.S Treasury Bonds		$ 7.2
	Gain on sale of Investments ($7.5 -$7.2 )		$ 0.3
	(To record Sold U.S Treasury Bonds for $ 7.5 Million )
Dec-29	Cash	$ 9
	Interest Revenue		$ 9
	(To record Received Cash Dividend )
Dec-31	Investment revenue receivable -Holistic Entertainment ($18*10%*2/12)	$ 0.3
	Investment revenue receivable -Household Plastics ($60*12%*1/12)	$ 0.6
	Investment Revenue ($0.3 +$ 0.6 )		$ 0.9
	(To record Accrued Interest on Holistic and Household Plastics)
Dec-31	Net Unrealized holding gains and losses-OCI	$ 9
	Fair value adjustment { (2 Million*$27)- $63}		$ 9
	(To record Revaluations on Millwork Ventures Common Shares)
	Fair Value Adjustment { ( 4 Million*$14 )- $48}	$ 8
	Net Unrealized holding gains and losses-I/S		$ 8
	(To record Revaluations on NXS Corporation Common shares)
Dec-31	Net Unrealized holding gains and losses-I/S	$ 8
	Investment Revenue { ($2.4+9+0.9)Million }	$ 12.3
	Gain on sale of Investments ( U.S Treasury Bonds )	$ 0.3
	Loss on Sale of Investment(Kanasas abstractors)		$ 3
	Income Summary ($8+$12.3+$0.3 - $ 3 )		$ 17.6
	(To record Closing Entry )

		($ In Million )
Date	General Journal	Debit	Credit
2022
Jan-07	Cash	$ 47
	Loss on sale of Investments ($48 -$47 )	$ 1
	Investment in NXS Common shares		$ 48
	(To record Sold NXS Corporation common shares for $ 47 Million )
	Note :
	It is assumed that there will be No Other Transactions involving trading securities the
	2022 Adjusting Entry to remove the fair value adjustments associated with solid
	securities will be as follows
2022
Dec-31	Net Unrealized holding gains and losses-I/S	$ 8
	Fair Value Adjustment		$ 8
	(To record Fair value adjustment associated with sold securities )