The following selected transactions relate to investment activities of Omamental Insulation Corporation during 2021. The company buys debt securities, not intending to profit from short-term differences in price and not necessarily to hold debt securities to maturity, but to have them available for sale in years when circumstances warrant. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020 Acquired 8% Distribution Transformers Corporation bonds costing $400.000 at face value Acquired $900 000 of American Instruments 10% bonds at face value Received semiannual interest payment on the Distribution Transformers bonds O Sold the Distribution Transformers bonds for $425.000 Purchased $1.400.000 of MSD Corporation 6% bonds costing at face value Doc. Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: SED (Hint: Interest must be accrued.) Required: 1. Prepare the appropriate journal entry for each transaction or event during 2021, 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. 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. Complete this question by entering your answers in the tabs below. Prepare the appropriate journal entry for each transaction or event during 2021, 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.) Journal entry worksheet 1 Record the acquisition of 8% Distribution Transformers Corporation bonds costing $400,000 at face value. onds 2 Record the acquisition of $900,000 of American Instruments' 10% bonds at face value. 3 Record the entry for the semiannual interest received on the Distribution Transformers bonds. 4 Record the entry to adjust to fair value on the date of sale of the Distribution Transformers bonds. 5 Record the entry for the reclassification adjustment on the date of sale Note : journal entry has been entered Record entry Clear entry View ao 5 Record the entry for the reclassification adjustment on the date of sale nd 6 Record the entry for sale of Distribution Transformers bonds for $425,000. 7 Record the acquisition of $1,400,000 of M&D Corporation 6% bonds at face value. 8 Record the interest accrual for American Instruments bonds. 9 Record the interest accrual for M&D bonds. 10 Record the entry for Fair value adjustment
