Exercise 12-7 (Algo) Various transactions relating to trading securities [LO12-1, 12-3]

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2021 and the first week of 2022.

2021Dec.17Purchased 110 Grocers' Supply Corporation bonds at par for $385,000.28Received interest of $2,400 from the Grocers' Supply Corporation bonds.31Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bond was $4,000 per bond.2022Jan.5Sold the Grocers' Supply Corporation bonds for $418,000.

Required:

1.Prepare the appropriate journal entry or entries for each transaction.

2.Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.