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