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 $40 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 $57 million.
		31		Received semiannual interest of $2.4 million from the Kansas Abstractors bonds.
Nov.		1		Purchased 10% bonds of Holistic Entertainment Enterprises at their $102 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 $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 $70 million face value, to be held until they mature in 2028. 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 common shares of NXS Corporation for $48 million, planning to earn profits from dividends or gains if prevailing market conditions encourage sale.
		23		Sold the Treasury bonds for $7.5 million.
		29		Received cash 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 $27.00 per share and $14.00 per share for the NXS Corporation common. The fair values of the bond investments were $57.1 million for Household Plastics Corporation and $18.3 million for Holistic Entertainment Enterprises.

2019
Jan.		7		Sold the NXS Corporation common shares for $47 million.

Required:
Prepare the appropriate journal entry for each transaction or event. (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 the books of Amalgamated General Corporation :

Date	Account Titles	Debit	Credit
2018		$	$
Oct 18	Investments	57
	Cash		57
Oct 31	Cash	2.4
	Investment Revenue		2.4
Nov 1	Investments	102
	Cash		102
Nov 1	Cash	37
	Loss on Sale of Investments	3
	Investments		40
Dec 1	Investments	70
	Cash		70
Dec 20	Investments	7.2
	Cash		7.2
Dec 21	Investments	48
	Cash		48
Dec 23	Cash	7.5
	Investments		7.2
	Gain on Sale of Investments		0.3
Dec 29	Cash	3
	Investment Revenue		3
Dec 31	Investment Revenue Receivable : Holistic Entertainment	1.7
	Investment Revenue Receivable: Household Plastics	0.7
	Investment Revenue		2.4
Dec 31	Unrealized Holding Gains and Losses	3
	Fair Value Adjustment		3
	Fair value adjustment for investment in Milwork Ventures
Dec 31	Fair Value Adjustment	8
	Unrealized Holding Gains and Losses		8
	Fair value adjustment for NXS Corporation investment
Dec 31	Investment Revenue	7.8
	Gain on Sale of Investments	0.3
	Net Unrealized Holding Gains and Losses	5
	Loss on Sale of Investments		3
	Income Summary		10.1
	To close the accounts
2019
Jan 7	Cash	47
	Loss on Sale of Investments	1
	Investments		48