Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $28,500. February 9 Purchased Sony notes for $62,640. June 12 Purchased Mattel bonds for $48,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $31,100; Sony, $53,150; and Mattel, $56,950. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $31,500. July 5 Sold all of the Mattel bonds for $41,450. July 22 Purchased Sara Lee notes for $19,900. August 19 Purchased Kodak bonds for $20,900. December 31 Fair values for debt in the portfolio are Kodak, $22,125; Sara Lee, $20,000; and Sony, $64,000. Year 3 February 27 Purchased Microsoft bonds for $159,600. June 21 Sold all of the Sony notes for $64,000. June 30 Purchased Black & Decker bonds for $58,400. August 3 Sold all of the Sara Lee notes for $16,950. November 1 Sold all of the Kodak bonds for $25,675. December 31 Fair values for debt in the portfolio are Black & Decker, $59,400; and Microsoft, $160,200. Problem 15-2A (Algo) Part 1 Required: 1. Prepare journal entries to record these transactions and the year-end fair value adjustments to the portfolio of long-term available-for-sale debt securities.
Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $28,500. February 9 Purchased Sony notes for $62,640. June 12 Purchased Mattel bonds for $48,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $31,100; Sony, $53,150; and Mattel, $56,950. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $31,500. July 5 Sold all of the Mattel bonds for $41,450. July 22 Purchased Sara Lee notes for $19,900. August 19 Purchased Kodak bonds for $20,900. December 31 Fair values for debt in the portfolio are Kodak, $22,125; Sara Lee, $20,000; and Sony, $64,000. Year 3 February 27 Purchased Microsoft bonds for $159,600. June 21 Sold all of the Sony notes for $64,000. June 30 Purchased Black & Decker bonds for $58,400. August 3 Sold all of the Sara Lee notes for $16,950. November 1 Sold all of the Kodak bonds for $25,675. December 31 Fair values for debt in the portfolio are Black & Decker, $59,400; and Microsoft, $160,200. Problem 15-2A (Algo) Part 1 Required: 1. Prepare journal entries to record these transactions and the year-end fair value adjustments to the portfolio of long-term available-for-sale debt securities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities.
Year 1
January 20 | Purchased Johnson & Johnson bonds for $28,500. |
---|---|
February 9 | Purchased Sony notes for $62,640. |
June 12 | Purchased Mattel bonds for $48,500. |
December 31 | Fair values for debt in the portfolio are Johnson & Johnson, $31,100; Sony, $53,150; and Mattel, $56,950. |
Year 2
April 15 | Sold all of the Johnson & Johnson bonds for $31,500. |
---|---|
July 5 | Sold all of the Mattel bonds for $41,450. |
July 22 | Purchased Sara Lee notes for $19,900. |
August 19 | Purchased Kodak bonds for $20,900. |
December 31 | Fair values for debt in the portfolio are Kodak, $22,125; Sara Lee, $20,000; and Sony, $64,000. |
Year 3
February 27 | Purchased Microsoft bonds for $159,600. |
---|---|
June 21 | Sold all of the Sony notes for $64,000. |
June 30 | Purchased Black & Decker bonds for $58,400. |
August 3 | Sold all of the Sara Lee notes for $16,950. |
November 1 | Sold all of the Kodak bonds for $25,675. |
December 31 | Fair values for debt in the portfolio are Black & Decker, $59,400; and Microsoft, $160,200. |
Problem 15-2A (Algo) Part 1
Required:
1. Prepare
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Year 2 and 3 for Fair Value at the end of the year are still incorrect and I do not understand why?
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