Problem 12-5 Various transactions related to trading securities [L012-1, 12-3] 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 portfolilo 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 $530,000 at face value. Sep. 1 Acquired $1,290,000 of American Instruments' 108 bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $565,000 Nov. 1 purchased $2,050,000 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 American Instruments bonds M&D Corporation bonds $1,243,000 $2,123,000 (Hint: Interest must be accrued) Required: 1. Prepare the appropriate journal entry for each transaction or event during 2cts, as wellas any adjusting entries necessary at year end. 2. Indicate any amounts income, and 12/3/2018 balance sheet as a result of these investments that Ormamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive K Prev 10 of 15Next > 8 7 8 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 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.) No Date General Journal Debit Credit March 31, 2018 Investment in Distribution Transformers bonds 530,000 Cash 530,000 1.290,000 2 September 01, 201 Investment in American Instruments bonds Cash 1,290,000 21.200 3 September 30, 201 Cash 21,200 988 4 October 02,2018 No journal entry required 5 October 02, 2018 Cash 565,000 Investment in Distribution Transformers bonds Gain on sale of investments 30,000 5,000 2,050,000 6 November 01,2018 Investment in M&D Corporation bonds Cash 2,050,000 7 December 31, 2018 Interest receivable 43,000 Investment revenue 43,000 8 December 31, 2018 Interest receivable 20,500 o 20,500 Investment revenue 9 December 31, 201 Fair value adjustment 26,000 Unrealized holding gain-oci 26,000 Required 2> 7 8 9 indicated with a minus sign.) Income statement: $ 84,700 Investment revenue 5,000 119,700 26,000 Gain on sale of investments Net income Statement of comprehensive income: Net loss Balance sheet: Assets Current Assets Interest receivable $ 43,000 Trading securities-amortized cost $ 3,340,000 Add: Fair value adjustment O 26,000 $ 3,366,000 Shareholders' Equity Unrealized holding loss-oci 26,000 Prev 10of 15 #: Next >
