Question

SEVE&E Chee 12 The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys equity securities as investments. None of Ornamental's investments are large enough to exert significant influence on the investee. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017 10 Mar. 31 Acquired Distribution Transformers Corporation common stock for $560,000. Sep. points 1 Acquired $1,140,000 of American Instruments common stock. Sep. 30 Received a $16,800 dividend on the Distribution Transformers common stock. 2 Sold the Distribution Trans formers common stock for $601,000. 1 Purchased $1,560,000 of M&D Corporation common stock. Skipped Oct. Nov. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: eBook American Instruments common stock $1,074,000 $1,637,000 M&D Corporation common stock Print 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. References Complete this question by entering your answers in the tabs below. Required 1 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 jourral entry required" in the first account field.) 12 RED Corporation common stock $1,637,000 Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year 10 end. 2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensve income, and 12/31/2018 balance sheet as a result of these investments. points Skipped Complete this question by entering your answers in the tabs below. eBook Required Required 2 Print 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.) References View transaction list Journal entry worksheet 2 3 5 6 7 Record the acquisition of Distribution Transformers Corporation common stock for $560,000. Note: Enter debits before credits. Date General Journal Debit Credit March 31, 2018 CA CT CUmp income, and 12/31/2018 balance sheet as a result of these investments. Skipped Complete this question by entering your answers in the tabs below. eBook Required 1 Required 2 Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Print References View transaction list Journal entry worksheet

Answer 1

1. In the books of Ornamental Insulation Corporation :

Date	General Journal	Debit	Credit
		$	$
March 31	Investment in AFS Securities	560,000
	Cash		560,000
Sep 1	Investment in AFS Securities	1,140,000
	Cash		1,140,000
Sep 30	Cash	16,800
	Dividend Revenue		16,800
Oct 2	Cash	601,000
	Investment in AFS Securities		560,000
	Gain on Sale of Investments		41,000
Nov 1	Investment in AFS Securities	1,560,000
	Cash		1,560,000
Dec 31	Fair Value Adjustment	11,000
	Unrealized Gain on Investment in AFS Securities		11,000

2.

Income Statement	$	$
Dividend Revenue	16,800
Gain on Sale of Investments	41,000	57,800
Statement of Comprehensive Income
Unrealized Gain on Investment in AFS Securities		11,000
Total Comprehensive Income		68,800
Balance Sheet
Assets
Investments
Investment in AFS Securities	2,700,000
Fair Value Adjustment	11,000	2,711,000
Stockholders Equity
Accumulated Other Comprehensive Income
Unrealized Gain on Investment in AFS Securities		11,000