The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 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, 2017. The Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $500, e00 at face value. Sep. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $575,000e. Nov. 1 Purchased $1,900,000 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: 1 Acquired $1,200,000 of American Instruments' 10% bonds at face value. $1,160,e00 $1,970,e00 American Instruments bonds M&D Corporation bonds (Hint: Interest must be accrued.) Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 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, 2017. The Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $500, e00 at face value. Sep. Sep. 30 Received semiannual interest payment on the Distribution Transformers bonds. Oct. 2 Sold the Distribution Transformers bonds for $575,000e. Nov. 1 Purchased $1,900,000 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: 1 Acquired $1,200,000 of American Instruments' 10% bonds at face value. $1,160,e00 $1,970,e00 American Instruments bonds M&D Corporation bonds (Hint: Interest must be accrued.) Required: 1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year end. 2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive income, and 12/31/2018 balance sheet as a result of these investments.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Please help with requirement two. Please and thank you. Thanks
Transcribed Image Text:The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2018. 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, 2017.
Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $500, e00 at face value.
Sep. 1 Acquired $1,200,000 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 $575,000.
Nov. 1 Purchased $1,90e,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:
$1,160,000
$1,970, 000
American Instruments bonds
M&D Corporation bonds
(Hint: Interest must be accrued.)
Required:
1. Prepare the appropriate journal entry for each transaction or event during 2018, as well as any adjusting entries necessary at year
end.
2. Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of comprehensive
income, and 12/31/2018 balance sheet as a result of these investments.
Transcribed Image Text:Indicate any amounts that Ornamental Insulation would report in its 2018 income statement, 2018 statement of
comprehensive income, and 12/31/2018 balance sheet as a result of these investments. (Amounts to be deducted shoul
indicated with a minus sign.)
Income statement:
79,000
75,000
Interest revenue
Gain on trading securities
Net income
2$
154,000
Statement of comprehensive income:
Net income
Investment in M&D Corporation bonds
75,000
Balance sheet:
Assets
Current Assets
Interest receivable
24
19,000
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