FINANCIAL ACCOUNTING
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ISBN: 9781259964947
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Subject: acounting
![Required information
Problem 15-2A (Algo) Recording, adjusting, and reporting available-for-sale debt securities
LO P3
[The following information applies to the questions displayed below.]
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 $24,000.
February 9
Purchased Sony notes for $58,590.
June 12 Purchased Mattel bonds for $44,000.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $25,700; Sony,
$48,450; and Mattel, $56,050.
Year 2
April 15 Sold all of the Johnson & Johnson bonds for $27,000.
Sold all of the Mattel bonds for $38,300.
July 5
July 22
August 19 Purchased Kodak bonds for $17,750.
Purchased Sara Lee notes for $16,300.
December 31 Fair values for debt in the portfolio are Kodak, $18,550; Sara Lee, $15,500; and
Sony, $63,000.
Year 3](https://content.bartleby.com/qna-images/question/c7fe5a73-45e4-4166-8ba1-50e355550dfc/27d580f4-8bdc-4ea6-9178-09ff6a1a58ce/9r65t3v_processed.jpeg)
Transcribed Image Text:Required information
Problem 15-2A (Algo) Recording, adjusting, and reporting available-for-sale debt securities
LO P3
[The following information applies to the questions displayed below.]
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 $24,000.
February 9
Purchased Sony notes for $58,590.
June 12 Purchased Mattel bonds for $44,000.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $25,700; Sony,
$48,450; and Mattel, $56,050.
Year 2
April 15 Sold all of the Johnson & Johnson bonds for $27,000.
Sold all of the Mattel bonds for $38,300.
July 5
July 22
August 19 Purchased Kodak bonds for $17,750.
Purchased Sara Lee notes for $16,300.
December 31 Fair values for debt in the portfolio are Kodak, $18,550; Sara Lee, $15,500; and
Sony, $63,000.
Year 3
Transcribed Image Text:Year S
February 27 Purchased Microsoft bonds for $159,400.
June 21 Sold all of the Sony notes for $60,400.
June 30 Purchased Black & Decker bonds for $53,900.
August 3 Sold all of the Sara Lee notes for $12,900.
November 1 Sold all of the Kodak bonds for $22,750.
December 31 Fair values for debt in the portfolio are Black & Decker, $56,700; and Microsoft,
$159,300.
Problem 15-2A (Algo) Part 2
2. Complete the following table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value
portfolio of long-term available-for-sale debt securities at each year-end.
Note: Loss amounts should be indicated with a minus sign.
Debt Investments
Long-Term Available-for-sale Securities (cost)
Fair value adjustment-Available-for-sale
Long-Term Available-for-sale Securities (Fair
value)
12/31/Year 1
12/31/Year 2
12/31/Year 3
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