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 8% Distribution Transformers Corporation bonds costing $400,000 at face value. Sep. 1 Acquired $900,000 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 $425,000. Nov. 1 Purchased $1,400,000 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 $ 850,000 M&D Corporation bonds $ 1,460,000 (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 Date Credit General Journal Investment in bonds Debit 400.000 1 March 31, 2021 ol Cash 400.000 2 900.000 September 01. 20 Investment in bonds Cash ol 900.000 3 September 30, 20 Cash 16,000 16.000 Interest revenue > 4 25.000 > October 02, 2021 Fair value adjustment Gain on investments (unrealized, OCI) 25,000 5 25,000 October 02, 2021 Reclassification adjustment (OCI) Fair value adjustment 25,000 > Oo OOO 6 425,000 October 02, 2021 Cash Investment in bonds Gain on investments (NI) 400.000 25.000 November 01, 204 Investment in bonds Cash lol 1,400,000 1,400,000 8 30.000 December 31, 20 Interest receivable Interest revenue olo 30,000 9 14.000 December 31, 204 Interest receivable Interest revenue 14.000 > 10 December 31, 20. Fair value adjustment Gain on investments (unrealized, OCI) lol 10.000 10.000 > Income statement: Interest revenue Gain on investments s 60,000 25,000 $ 85,000 S 85,000 s 35,000 25,000 Net income Statement of comprehensive income: Net income Other comprehensive income: Gain on investments Reclassification adjustment Comprehensive income Balance sheet: Assets Current Assets Cash Interest receivable 10,000 95,000 S $ 425,000 X 44,000 S 900,000 10,000 S 910,000 Noncurrent Assets Investment in bonds Add: Fair value adjustment Shareholders' Equity Retained earnings Accumulated other comprehensive income