The following selected transactions relate to investment activities of Ornamental 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. Ornamentals fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020.

Mar.		31		Acquired 5% Distribution Transformers Corporation bonds costing $600,000 at face value.
Sep.		1		Acquired $1,200,000 of American Instruments 7% bonds at face value.
Sep.		30		Received semiannual interest payment on the Distribution Transformers bonds.
Oct.		2		Sold the Distribution Transformers bonds for $645,000.
Nov.		1		Purchased $1,600,000 of M&D Corporation 3% 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	$	1,130,000
M&D Corporation bonds	$	1,680,000

(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.

No 1 2 3 4 5 6 7 8 9 10 Date March 31, 2021 Investment in bonds Cash September 01, 20 Investment in bonds Cash September 30, 20 Cash Interest revenue October 02, 2021 Fair value adjustment Gain on investments (unrealized, OCI) October 02, 2021 Reclassification adjustment (OCI) Fair value adjustment October 02, 2021 Cash General Journal Investment in bonds Gain on investments (NI) November 01, 202 Investment in bonds Cash December 31, 202 Interest receivable Interest revenue December 31, 202 Interest receivable Interest revenue December 31, 202 Fair value adjustment Gain on investments (unrealized, OCI) 33 333 Debit 600,000 1,200,000 15,000 45,000 45,000 645,000 1,600,000 28,000 8,000 10,000 Credit 600,000 1,200,000 15,000 45,000 45,000 600,000 45,000 1,600,000 28,000 8,000 10,000 Required 1 Required 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. (Amounts to be deducted should be in with a minus sign.) Income statement: Interest revenue Gain on investments Net income Statement of comprehensive income: Net income Other comprehensive income: Reclassification adjustment Gain on investments Comprehensive income Balance sheet: Current Assets Interest receivable Assets Noncurrent Assets Investment in bonds Add: Fair value adjustment Shareholders' Equity Retained earnings > >> $ 3 33 45,000 2,800,000 10,000 $ $ $ 51,000 45,000 96,000 96,000 45,000 $ 106,000 $ $ 36,000 $ 2.810,000 10,000 X Show