Sooner Company holds debt and equity securities as investments. The companys year-end is December 31. Sooner records adjusting entries, including the fair value adjustment, at year-end. Sooners December 31, 2020, balance sheet included the following information:

Current assets Investment in Longhorn Co. stock $38,000 Fair value adjustment ( 1,000) $37,000

Long-term investments Investment in Tiger Inc. bonds-AFS $20,000 Fair value adjustment ( 2,000) $18,000

Shareholders equity Retained earnings 30,000 Accumulated OCI (2,000)

Part 1-Record the 2021 transactions below in journal entries or T-accounts.

On March 1, Sooner received $1,500 in dividends from the Longhorn Company

On June 1, Sooner sold the Longhorn Co. stock for $40,000.

On June 30, Sooner received semiannual interest payment (Jan 1 to June 30) on Tiger Inc., 9% bonds.

On July 1, Sooner purchased $50,000 of Cowboy Co. 8% bonds at a price that yields 10%. The bonds mature in 2 years on July 1, 2023, and pay interest semiannually on June 30 and December 31. Sooner intends to hold this investment to maturity. Hint: you will need to compute the purchase price of the bonds.

On October 1, Sooner purchased $100,000 of Wildcats Co. 12% bonds at face value. The bonds mature in 10 years and pay interest semiannually on March 31 and September 30. The bonds will be held available for sale as circumstances warrant.

On November 1, Sooner purchased 500 shares of Red Raider Co. common stock for $23,000 as a short-term investment.

On December 31, Sooner received $2,000 in interest on the Cowboy Co. bonds and recorded interest revenue using the effective interest method.

On December 31, Sooner received semiannual interest payment (June 30 to Dec. 31) on Tiger Inc., 9% bonds.

On December 31, 2021, Sooner recorded adjusting entries for accrued interest revenue and the fair value adjustment. (Hint: For investments in AFS securities, be sure to consider the 12-31-20 balance in the Fair Value Adjustment account when determining the amount of unrealized gain/loss for 2021.)

Year-end fair values were: Tiger Inc. bonds $16,000 Cowboy Co. bonds $ 44,000 Red Raider Co. common stock. $25,000 Wildcats Co. bonds $105,000

Part 2: Determine the amounts reported for: (a) 2021 for net income and comprehensive income. 2021 income from operations (without investment-related items) is $25,000. (b) investment-related assets on the 2021 balance sheet. (c) retained earnings and accumulated OCI on the 2021 balance sheet. Ignore income taxes.