Question

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017. Mar. 31 Acquired 8% Distribution Transformers corporation bonds costing $value. Sep. 1 Acquired $1,320,000 of American Instruments' 10% bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $580,000 Nov . 1 Purchased $2,100,000 of M&D Corporation 6% bonds at face value . Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: Nor Distribut ioa ferest payseat on tha plot bonds at face 8540.000 at face value. American Instruments bonds M&D Corporation bonds $1,274,000 $2,174,000 (Hint: Interest must be accrued.) Required 1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end 2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments. Answer is not complete. Complete this question by entering your answers in the tabs below. quired Required 2 Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

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Naming convention in drop down is not available, can be slightly different: Solution ournal entries Date Account title and explaination bitCredit 5) Oct.02 Cash $5,80,000 Fair value adjustment Investment in Distribution Tranformers bonds $ 40,000 $5,40,000 2018 Balance Sheet: Income Statement: Interest Revenue Unrealized holding gain (21600+44000+21000) 86600 NI (40000+28000) 68000 Net Income Statement of Comprehensive Income Net Income 154600 154600 Balance Sheet: Assets: Current Assets Interest Receivable 65000 Investments: Securities - Trading Add: Fair value adiustment (900000+1400000) 3420000 28000 3448000 Shareholders' Equity: Retained Earnin 154600