At the end of 2018, Terry Company prepared the followingschedule of investments in available-for-sale debt securities:
Company | Amortized Cost | 12/31/18 Fair Value | Cumulative Change in Fair Value |
| Morgan Company | $30,000 | $29,200 | $(800) |
| Nance Company | 50,000 | 53,200 | 3,200 |
| Totals | $80,000 | $82,400 | $2,400 |
During 2019, the following transactions occurred:
| July 1 | Purchased Oscar Company debt securities with a par value of100,000 for $98,000. The securities carry an annual interest rateof 10%, mature on July 1, 2024, and pay interest seminannually onJuly 1 and December 31. Terry uses the straight-line method toamortize any discounts or premiums. |
| Oct. 11 | Sold all of the Morgan Company securities for $28,000 plusinterest of $1,400. |
| Dec. 31 | Received interest of $6,000 on the Nance Company and OscarCompany debt securities, and the following yearend total marketvalues were available: Nance Company debt securities, $54,000;Oscar Company debt securities, $96,000. |
Required:
| 1. | Prepare journal entries to record the precedinginformation. |
| 2. | Show how the preceding items are reported on Terry’s December31, 2019, balance sheet. Assume all investments arenoncurrent. |
