The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company...
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The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value. September 1 Acquired $900,000 of American Instruments' 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 Sold the Distribution Transformers bonds for $425,000. November 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value. December 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are American Instruments bonds M&D Corporation bonds (Hint: Interest must be accrued.) Required: $ 850,000 $ 1,460,000 1. Prepare the appropriate journal entry for each transaction or event during 2024, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes. Required 1 Required 2 Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes. Income statement: Interest revenue Gain on investments Net income Statement of comprehensive income: Net income Other comprehensive income Comprehensive income Balance sheet: Current Assets Investments Assets $ 46,000 25,000 71,000 0 0 Shareholders' Equity No Date General Journal Debit Credit 1 March 31, 2024 Investment in bonds 400,000 Cash 400,000 2 September 01, 2024 Investment in bonds Cash 3 September 30, 2024 Cash Interest revenue 4 October 02, 2024 Cash Investment in bonds Gain on investments (unrealized, NI) 5 October 02, 2024 Cash Investment in bonds Gain on investments (unrealized, NI) November 01, Investment in bonds 2024 Cash 7 December 31, 2024 Interest receivable Interest revenue 8 December 31, 2024 Interest receivable Interest revenue 900,000 900,000 16,000 16,000 425,000 400,000 25,000 425,000 40,000 25,000 140,000 140,000 30,000 30,000 14,000 14,000 December 31, 9 Fair value adjustment 10,000 2024 Loss on investments (unrealized, OCI) 10,000 The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental's fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value. September 1 Acquired $900,000 of American Instruments' 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 Sold the Distribution Transformers bonds for $425,000. November 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value. December 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are American Instruments bonds M&D Corporation bonds (Hint: Interest must be accrued.) Required: $ 850,000 $ 1,460,000 1. Prepare the appropriate journal entry for each transaction or event during 2024, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes. Required 1 Required 2 Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes. Income statement: Interest revenue Gain on investments Net income Statement of comprehensive income: Net income Other comprehensive income Comprehensive income Balance sheet: Current Assets Investments Assets $ 46,000 25,000 71,000 0 0 Shareholders' Equity No Date General Journal Debit Credit 1 March 31, 2024 Investment in bonds 400,000 Cash 400,000 2 September 01, 2024 Investment in bonds Cash 3 September 30, 2024 Cash Interest revenue 4 October 02, 2024 Cash Investment in bonds Gain on investments (unrealized, NI) 5 October 02, 2024 Cash Investment in bonds Gain on investments (unrealized, NI) November 01, Investment in bonds 2024 Cash 7 December 31, 2024 Interest receivable Interest revenue 8 December 31, 2024 Interest receivable Interest revenue 900,000 900,000 16,000 16,000 425,000 400,000 25,000 425,000 40,000 25,000 140,000 140,000 30,000 30,000 14,000 14,000 December 31, 9 Fair value adjustment 10,000 2024 Loss on investments (unrealized, OCI) 10,000
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