Question

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys equity securities as noncurrent 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, 2020. Mar. 31 Acquired Distribution Transformers Corporation common stock for $550,000. Sep. 1 Acquired $1,125,000 of American Instruments' common stock. Sep. 30 Received a $22,000 dividend on the Distribution Transformers common stock. Oct. 2 Sold the Distribution Transformers common stock for $590,000. Nov. 1 Purchased $1,550,000 of M&D Corporation common stock. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: American Instruments common stock M&D Corporation common stock $1,060,000 $1,625,000 Required: 1. Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year- end. 2. Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments.

Answer 1

23 24 25 26 27 28 29 30 $550000 1) Investment in distribution Transform - Bank. $a goooo 12 Investment in American $1125000 Instoobnent Bank #1125000 3) Cash $22000 Dividend income $22000 $550000 - Bank. $590000 Investment in dismibution Transform Gain on sale $ 40000

00 5) $ 1550000 Inuestment in m&D Corporation Bank. $1550000 6) Investment in $75000 MAD loop . Gain COCI) $75000 LossCoci) $65000 Investment in. $6500U Distribution Danstomer.

Income statement $22000 $40000 $ 62000 Diudend income Gain on sale Net income Statement of compehensive income Gain on Paid value. C$70000 - $65000) Other comprebensene income comprehensive Income Current Alset San Cash $10000 $10000 78000 (8613000) Non Current Asset Investment in M&D. $/625000 Inueshment in Distojbution, $1060000 $8685000

Shareholder's equity Retained eamings $7000