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during 2024. 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, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value. September 1 Acquired $900,000 of American Instruments 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 sold the Distribution Transformers bonds for $425, 000. November 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value. December 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: Prepare the appropriate journal entry for each transaction or event during 2024, 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. Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes.

during 2024. 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, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value. September 1 Acquired $900,000 of American Instruments 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 sold the Distribution Transformers bonds for $425, 000. November 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value. December 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: Prepare the appropriate journal entry for each transaction or event during 2024, 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. Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes.

College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter22: Corporations: Bonds
Section: Chapter Questions
Problem 5MC: Bond sinking fund earnings are (a) subtracted from the bond sinking fund. (b) added to the bond...
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6 7 8 10 October 02, 2024 Fair value adjustment Investment in bonds November 01, 202 Investment in bonds Cash December 31, 202 Investment in bonds Gain on investments (unrealized, OCI) December 31, 202 Gain on investments (unrealized, OCI) Investment in bonds December 31, 202 Interest receivable Interest revenue Besplat Xxx x 425,000 1,400,000 50,000 x 60,000 x 30,000 X Required 2 > 25,000 x 1,400,000 50,000 X 60,000 X 30,000 x
Transcribed Image Text:6 7 8 10 October 02, 2024 Fair value adjustment Investment in bonds November 01, 202 Investment in bonds Cash December 31, 202 Investment in bonds Gain on investments (unrealized, OCI) December 31, 202 Gain on investments (unrealized, OCI) Investment in bonds December 31, 202 Interest receivable Interest revenue Besplat Xxx x 425,000 1,400,000 50,000 x 60,000 x 30,000 X Required 2 > 25,000 x 1,400,000 50,000 X 60,000 X 30,000 x
The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. 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, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value. September 1 Acquired $900,000 of American Instruments ³ 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 sold the Distribution Transformers bonds for $425, 000. November 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value. December 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: Prepare the appropriate journal entry for each transaction or event during 2024, 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. Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes.
Transcribed Image Text:The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2024. 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, 2023. March 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value. September 1 Acquired $900,000 of American Instruments ³ 10% bonds at face value. September 30 Received semiannual interest payment on the Distribution Transformers bonds. October 2 sold the Distribution Transformers bonds for $425, 000. November 1 Purchased $1,400,000 of M&D Corporation 6% bonds at face value. December 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: Prepare the appropriate journal entry for each transaction or event during 2024, 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. Indicate any amounts that Ornamental Insulation would report in its 2024 income statement, 2024 statement of comprehensive income, and 12/31/2024 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments. Ignore income taxes.
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