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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. Ornamentals fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020.

Mar.		31		Acquired 8% Distribution Transformers Corporation bonds costing $480,000 at face value.
Sep.		1		Acquired $1,020,000 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 $513,000.
Nov.		1		Purchased $1,480,000 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:

American Instruments bonds	$	962,000
M&D Corporation bonds	$	1,548,000

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 earnings as a result of these investments.

• Record the acquisition of 8% Distribution Transformers Corporation bonds costing $480,000 at face value.

Note: Enter debits before credits.

1.

	Date General Journal Debit Credit March 31, 2021 Gain on investments (NI) 480,000 Cash 480,000

2. Record the acquisition of $1,020,000 of American Instruments 10% bonds at face value.

	Date General Journal Debit Credit September 01, 2021 Gain on investments (NI) 1,020,000 Cash 1,020,000

3.Record the entry for the semiannual interest received on the Distribution Transformers bonds.

	Date General Journal Debit Credit September 30, 2021 Cash Interest revenue

4.Record the entry for the semiannual interest received on the Distribution Transformers bonds.

	Date General Journal Debit Credit September 30, 2021 Cash Interest revenue

5.Record the entry for the reclassification adjustment on the date of sale.

	Date General Journal Debit Credit October 02, 2021

6.Record the entry for sale of Distribution Transformers bonds for $513,000.

	Date General Journal Debit Credit October 02, 2021

7.Record the acquisition of $1,480,000 of M&D Corporation 6% bonds at face value.

	Date General Journal Debit Credit November 01, 2021

8. Record the interest accrual for American Instruments bonds.

9.Record the interest accrual for M&D bonds.

10. Record the entry to adjust fair value of the investments at year-end.

Part 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 earnings as a result of these investments. (Amounts to be deducted should be indicated with a minus sign.)

Income statement: $ 0 Net income Statement of comprehensive income: Other comprehensive income: 0 Comprehensive income Balance sheet: Assets Current Assets Noncurrent Assets 0 Shareholders' Equity

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