1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
12345 [234]
3 years ago
9

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The compan

y 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, 2020.
Mar. 31 Acquired 8% Distribution Transformers Corporation bonds costing $400,000 at face value.
Sep. 1 Acquired $900,000 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 $425,000.
Nov. 1 Purchased $1,400,000 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 $ 850,000
M&D Corporation bonds $ 1,460,000 (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.
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.
Business
1 answer:
Digiron [165]3 years ago
6 0

Answer and Explanation:

a)

Journal entries

Mar.31

Dr Investment in Distribution Transformers shares $ 400,000.00

Cr Cash $ 400,000.00

Sept.1

Dr Investment in American Instruments bonds $900,000.00

Cr Cash $900,000.00

Sept.30

Dr Cash ($400,000 x 8%/2) $ 16,200.00

Cr Investment revenue $ 16, 000.00

Oct.2

Dr Cash $ 425,000.00

Cr Investment in Distribution Transformers $ 400,000.00

Cr Gain on sale of investments $ 25,000.00

Nov.1

Dr Investment in M&D Corporation shares $1,400,000.00

Cr Cash $1,400,000.00

Dec.31

Dr Investment revenue receivable $ 30,000.00

Cr Investment revenue ($900,000 x 10% x 4/12) $ 30,000.00

Dec.31

Dr Investment revenue receivable $ 14,000.00

Cr Investment revenue ($1,400,000x 6% x 2/12) $ 14,000.00

Dec.31

Dr Fair value adjustment (calculated below) $ 10,000.00

Cr Net unrealized holding gains and losses–OCI $ 10,000.00

Available for sale securities Cost Fair market Value Profit/Loss

M & D Corporation shares

$1,400,000.00 $ 1,460,000.00 $ 60,000.00

American Instruments bonds $900,000.00 $850,000.00 ($50,000.00)

Totals $2,300,000.00 $2,310,000.00 $ 10,000.00

b)

Income Statement

Investment Revenue = $16,200 + $30,000 + 14,000 $ 60,200.00

Gain on sale of investments $ 25,000.00

Statement of comprehensive income

Net unrealized holding gains and losses on investments $ 10,000.00

Balance sheet:

Current Assets

Investment revenue receivable $ 30,000.00

Securities available-for-sale $2,300,000.00

Add: Fair value adjustment $ 10,000.00 $2,310,000.00

Shareholders’ Equity

Net unrealized holding gains and losses on investments $ 10,000.00

You might be interested in
Differential costs ______. Multiple choice question. are always variable costs include all costs related to a decision can be fi
natka813 [3]

Answer:

Can be fixed or variable

Explanation:

8 0
2 years ago
Sheffield borrowed $701000 on October 1, 2017 and is required to pay $721000 on March 1, 2018. What amount is the note payable r
Georgia [21]

Answer:

On October 01, 2017

The amount actually borrowed that is $ 701,000 will be recorded as liability/note payable on october 01, 2017. The following accounting entry will be passed

Debit Cash Asset           $ 701,000

Credit Note payable       $ 701,000

Interest recognized from October 1 to December 31, 2017

The premium amount paid on redemption will be recorded as interest over the period of time. The interest amount is

Interest = 721,000 -701,000 = $ 20,000

So this above calculated expense will be recognized as an expense over loan period.

5 0
3 years ago
What is work?
bekas [8.4K]
Work refers to any useful activity.
5 0
3 years ago
Read 2 more answers
All of Ameliorate Inc.'s sales are on account. 60% of the credit sales are collected in the month of sale, 30% in the month foll
Sidana [21]

Answer:

Total cash collection= $530,000

Explanation:

Giving the following information:

<u>Sales:</u>

February $500,000

March $400,000

April $600,000

60% of the credit sales are collected in the month of sale, 30% in the month following sale, and 10% in the second month following the sale.

<u>Cash collection April:</u>

Cash collection credit sales from April= (600,000*0.6)= 360,000

Cash collection credit sales from March= (400,000*0.3)= 120,000

Cash collection credit sales from February= (500,000*0.1)= 50,000

Total cash collection= $530,000

6 0
2 years ago
Efficiency is ________, while effectiveness is ________.
AnnyKZ [126]

Efficiency is the ability to produce the result with minimal utilization of resources to get maximum benefits, while effectiveness is the ability to produce a better result.

<h3>What is Efficiency?</h3>

Efficiency is the ability to work with the least usage of resources in the best possible manner, which means with the minimum usage of resources we get maximum benefits.

Thus, efficiency is the ability to produce the intended result in the best possible manner with the least waste of resources, time, and effort, while effectiveness is the ability to produce the best result that delivers more value or achieves a better outcome.

Learn more about Efficiency here:

brainly.com/question/13828557

#SPJ1

3 0
2 years ago
Other questions:
  • Maggie’s mom agrees to let Maggie buy small gifts for some of her friends. Each gift costs $4. Maggie’s mom gave her a budget of
    10·1 answer
  • Workplace surveys suggest that satisfied employees are becoming _____. more uncommon more widespread less expensive less product
    12·1 answer
  • A sequence of values of some variable or composite of variables taken at successive, uninterrupted time periods is called a
    6·1 answer
  • Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the present and proposed produ
    6·1 answer
  • One of the biggest mistakes you can make during an interview is failing to match the interviewer’s communication style. Please s
    6·2 answers
  • ________________________ diagnose, replace, maintain, identify faults with, and repair electrical wiring and computer-based equi
    10·1 answer
  • What would happen if your boss at the bookstore asked you to decrease some of the business' variable costs
    14·1 answer
  • With an expansionary monetary policy, investment, consumption, and net exports all ________, which results in the aggregate dema
    15·1 answer
  • The risk-free rate is 2.4% and the market expected return is 12.1%. What is the expected return of a stock that has a beta of .8
    12·1 answer
  • Corporate _______ is the system of company oversight designed to ensure that the interests of owners and other stakeholders are
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!