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 $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 July 5 Sold all of the Johnson & Johnson bonds for $23,500. Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara Lee notes for $9,750. November 1 Sold all of the Kodak bonds for $20,475. December 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600. 2. Complete the following table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value of the portfolio of long-term available-for-sale debt securities at each year-end. (Loss amounts should be indicated with a minus sign.) Debt Investments Long-Term AFS Securities (cost) Fair value adjustment-AFS Long-Term AFS Securities (Fair value) 12/31/Year 1 12/31/Year 2 12/31/Year 3

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 $20,500.
February 9
Purchased Sony notes for $55,440.
June 12 Purchased Mattel bonds for $40,500.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350.
Year 2
Sold all of the Johnson & Johnson bonds for $23,500.
Sold all of the Mattel bonds for $35,850.
April 15
July 5
July 22
August 19
Purchased Sara Lee notes for $13,500.
Purchased Kodak bonds for $15,300.
December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000.
Year 3
February 27 Purchased Microsoft bonds for $160,800.
June 21 Sold all of the Sony notes for $57,600.
June 30 Purchased Black & Decker bonds for $50,400.
August 3 Sold all of the Sara Lee notes for $9,750.
November 1 Sold all of the Kodak bonds for $20,475.
December 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600.
2. Complete the following table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value of the portfolio
of long-term available-for-sale debt securities at each year-end. (Loss amounts should be indicated with a minus sign.)
Debt Investments
Long-Term AFS Securities (cost)
Fair value adjustment-AFS
Long-Term AFS Securities (Fair value)
12/31/Year 1
12/31/Year 2 12/31/Year 3
Transcribed Image Text: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 $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 Sold all of the Johnson & Johnson bonds for $23,500. Sold all of the Mattel bonds for $35,850. April 15 July 5 July 22 August 19 Purchased Sara Lee notes for $13,500. Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara Lee notes for $9,750. November 1 Sold all of the Kodak bonds for $20,475. December 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600. 2. Complete the following table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value of the portfolio of long-term available-for-sale debt securities at each year-end. (Loss amounts should be indicated with a minus sign.) Debt Investments Long-Term AFS Securities (cost) Fair value adjustment-AFS Long-Term AFS Securities (Fair value) 12/31/Year 1 12/31/Year 2 12/31/Year 3
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