Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
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. Ornamental's fiscal year ends on December 31 No investments were held by Ornamental on December 31, 2020. Mar. 31 Acquired 6% Distribution Transformers Corporation bonds conting $540,000 ot face value. Sep. 1 Acquired $1,110,000 of American Instruments BX bonds at face value. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $579,000. Nov. 1 Purchased $1,560,000 of M&D Corporation 4% 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 M&D Corporation bonds $1,046,000 $1,635,000 (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 12/312021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Non-Technical Guide To International Accounting

Authors: Roger Hussey, Audra Ong

1st Edition

1946646865, 9781946646866

More Books

Students also viewed these Accounting questions