Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Walk through it all with work, thanks :) The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys

Walk through it all with work, thanks :)
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 matur 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 Omamental on December 31, 2020. Mar. 31 Acquired 7x Distribution Transformers Corporation bonds costing $520,000 at face value. Sep. 1 Acquired $1,080,090 of American Instruments' 9% bonds at face value. Sep. 3e Received semiannual interest payment on the Distribution Transforners bonds. oct. 2 Sold the Distribution Transforners bonds for $557,009. Nov. 1 Purchased $1,560,600 of M\$D Corporation 5x bonds at face value. Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments. The market prices of the investments are: (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 eamings as a result of these investments. Record the acquisition of 7% Distribution Transformers Corporation bonds costing $520,000 at face value. Note: Enter debits before credits. Journal entry worksheet \begin{tabular}{lllllll} 5 & 7 & 3 & 9 & 10 \\ \hline \end{tabular} Record the acquisition of $1,080,000 of American Instruments' 9% bonds at face value. Note: Enter debits before oredits. Journal entry worksheet Record the entry for the semiannual interest received on the Distribution Transformers bonds. Note: Enter debits before credits. Journal entry worksheet 9 10 Record the entry to adjust to fair value on the date of sale of the Distribution Transformers bonds. Note: Enter debits before credits. Journal entry worksheet $557,000. Note: Enter debits before credits. Journal entry worksheet 1 9 Record the acquisition of $1,560,000 of M\&D Corporation 5% bonds at face value. Note: Enter debits before credits. Journal entry worksheet Record the interest accrual for American Instruments bonds. Note: Enter debits before credits. Journal entry worksheet Note: Enter debits before credits. Journal entry worksheet 12345678 9 Record the entry to adjust fair value of the investments at year-end. Note: Enter debits before credits. \begin{tabular}{|l|l|l|l|l|} \hline Income statement: \\ \hline & \\ \hline Net income \\ \hline Statement of comprehensive income: & & & & \\ \hline & & & & \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions