Problem 12-6 Various transactions related to securities available-for-sale [LO12-1,12-4] The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. The company buys debt securities, not intending to profit from short-tecm differences in price and not necessarily to hold debt securities to maturity, but to have them available for sale when circumstances Warrant. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2017 Mar. 31 Acquired 6% Distribution Transformers corporation bonds costing SS00, ooo at face value. Sep. 1 Acquired $1,050,000 of American Instruments, 8% bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $535,000. Nov. 1 Purchased $1,500,000 of M&D Corporation 48 bonds costing at face value. or: 1 Porahate i0s ocot.os necessary adjusting entry(s) relating to the investments. The market prices of the investments are: $ 990,000 $1,570, 000 Anerican Instrunents bonds M&D Corporation bonds 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. For any sales, prepare entries to update the fair-value adjustment, record any reclassification adjustment, and income, and 12/31/2018 balance sheet as a result of these investments. 2. Indicate any amounts that Ornamental Insulation wuldrepo in ts 2018 income statement, 2018 statement of comprehensive Prey 11 of 15 Next Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. For any sales, prepare entries to update the fair-value adjustment, record any reclassification adjustment, and record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the acquisition of 696 Distribution Transformers Corporation bonds costing $500,000 at face value. Note: Enter debits before credits. General Journal Debit Credit Date March 31, 2018 K Prev 1 5 Next Check my work Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. For any sales, prepare entries to update the fair-value adjustment, record any reclassification adjustment, and record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the entry for the semiannual interest received on the Distribution Transformers bonds. Note: Enter debits before credits. Date General Journal Debit Credit September 30, 2018 KPrev 11 of 15EE Next Check my work For any sales, prepare entries to update the fair-value adjustment, record any reclassification adjustment, and record the sale. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the entry to adjust to fair value on the date of sale of the Distribution Transformers bonds. Note: Enter debits before credits. Debit Credit Date October 02, 2018 View transaction list Journal entry worksheet 10 Record the acquisition of 1,050,000 of American Instruments, 8% bonds at face value. Note: Enter debits before credits. Date General Journal Debit Credit September 01, 2018 Clear entry View general journal Record entry Journal entry worksheet 4 6 9 10 Record the entry for the reclassification adjustment on the date of sale Note: Enter debits before credits. Date General Journal Debit Credit October 02, 2018 Record entry Clear entry View general journal Journal entry worksheet Record the entry for sale of Distribution Transformers bonds for $535,000. Note: Enter debits before credits. Date General Journal Debit Credit es October 02,2018 Clear entry View general journal Record entry Journal entry worksheet K12 3 4 5 7 8 9 10 Record the acquisition of $1,500,000 of M&D Corporation 4% bonds at face value. Note: Enter debits before credits. Date General Journal Debit Credit November 01, 2018 View general journal Record entry Clear entry Prev 11 of 15 Next > Journal entry worksheet 2 4 7 8 10 Record the interest accrual for American Instruments bonds. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2018 Clear entry View general journal Record entry Journal entry worksheet K1 2 3 4 5 6 7 89 10 Record the interest accrual for M&D bonds. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2018 View general journal Record entry Clear entry 4sf 15Next> Journal entry worksheet 2 4 6 7 9 10 Record the entry for Fair-value adjustment. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2018 Clear entry View general journal Record entry 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. (Amounts to be deducted sh indicated with a minus sign.) Income statement: Statement of comprehensive income: Balance sheet Assets Current Assets Investments Balance sheet: Assets Current Assets Shareholders' Equity Accumulated other comprehensive income K Prev 11 of 15iNext >