Question
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
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 portfolio. Ornamentals 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 $520,000 at face value. | ||
Sep. | 1 | Acquired $1,260,000 of American Instruments' 10% bonds at face value. | ||
Sep. | 30 | Received semiannual interest payment on the Distribution Transformers bonds. | ||
Oct. | 2 | Sold the Distribution Transformers bonds for $550,000. | ||
Nov. | 1 | Purchased $2,000,000 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 | $ | 1,212,000 | |
M&D Corporation bonds | $ | 2,072,000 | |
(Hint: Interest must be accrued.) 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.
Income statement: | Debit | Credit |
Interest Revenue | ||
Gain on sale of investment | ||
Statement of Comprehensive Income: | ||
Balance Sheet: | ||
Assets | ||
Current Assets | ||
Investments | ||
Shareholders' Equity | ||
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