The following selected transactions relate to investmentactivities of Ornamental Insulation Corporation during 2018. Thecompany buys debt securities, intending to profit from short-termdifferences in price and maintaining them in an active tradingportfolio. Ornamentalâs fiscal year ends on December 31. Noinvestments were held by Ornamental on December 31, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bondscosting $550,000 at face value.
Sep. 1 Acquired $1,350,000 of American Instruments' 10% bonds atface value.
Sep. 30 Received semiannual interest payment on the DistributionTransformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for$595,000.
Nov. 1 Purchased $2,150,000 of M&D Corporation 6% bonds atface value.
Dec. 31 Recorded any necessary adjusting entry(s) relating tothe investments. The market prices of the investments are: AmericanInstruments bonds $ 1,305,000 M&D Corporation bonds $ 2,225,000(Hint: Interest must be accrued.)
Required: 1. Prepare the appropriate journal entry for eachtransaction or event during 2018, as well as any adjusting entriesnecessary at year end.
2. Indicate any amounts that Ornamental Insulation would reportin its 2018 income statement, 2018 statement of comprehensiveincome, and 12/31/2018 balance sheet as a result of theseinvestments.
The following selected transactions relate to investmentactivities of Ornamental Insulation Corporation during 2018. Thecompany buys debt securities, intending to profit from short-termdifferences in price and maintaining them in an active tradingportfolio. Ornamentalâs fiscal year ends on December 31. Noinvestments were held by Ornamental on December 31, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bondscosting $550,000 at face value.
Sep. 1 Acquired $1,350,000 of American Instruments' 10% bonds atface value.
Sep. 30 Received semiannual interest payment on the DistributionTransformers bonds.
Oct. 2 Sold the Distribution Transformers bonds for$595,000.
Nov. 1 Purchased $2,150,000 of M&D Corporation 6% bonds atface value.
Dec. 31 Recorded any necessary adjusting entry(s) relating tothe investments. The market prices of the investments are: AmericanInstruments bonds $ 1,305,000 M&D Corporation bonds $ 2,225,000(Hint: Interest must be accrued.)
Required: 1. Prepare the appropriate journal entry for eachtransaction or event during 2018, as well as any adjusting entriesnecessary at year end.
2. Indicate any amounts that Ornamental Insulation would reportin its 2018 income statement, 2018 statement of comprehensiveincome, and 12/31/2018 balance sheet as a result of theseinvestments.
