Mead Inc. 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 Jan. 20 Purchased Johnson & Johnson bonds for $25,000. Feb. 9 Purchased notes of Sony for $59,490. June 12 Purchased bonds of Mattel for $45,000. Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,900; Sony, $49,050; and Mattel, $55,950. Year 2 Apr. 15 Sold all of the bonds of Johnson & Johnson for $28,000. July 5 Sold all of the bonds of Mattel for $39,000. July 22 Purchased notes of Sara Lee for $17,100. Aug. 19 Purchased bonds of Kodak for $18,450. Dec. 31 Fair values for debt in the portfolio are Kodak, $18,900; Sara Lee, $16,500; and Sony, $63,000. Year 3 Feb. 27 Purchased bonds of Microsoft for $161,000. June 21 Sold all of the notes of Sony for $61,200. June 30 Purchased bonds of Black & Decker for $54,900. Aug. 3 Sold all of the notes of Sara Lee for $13,800. Nov. 1 Sold all of the bonds of Kodak for $23,400. Dec. 31 Fair values for debt in the portfolio are Black & Decker, $57,300; and Microsoft, $159,500.
Mead Inc. 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 Jan. 20 Purchased Johnson & Johnson bonds for $25,000. Feb. 9 Purchased notes of Sony for $59,490. June 12 Purchased bonds of Mattel for $45,000. Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,900; Sony, $49,050; and Mattel, $55,950. Year 2 Apr. 15 Sold all of the bonds of Johnson & Johnson for $28,000. July 5 Sold all of the bonds of Mattel for $39,000. July 22 Purchased notes of Sara Lee for $17,100. Aug. 19 Purchased bonds of Kodak for $18,450. Dec. 31 Fair values for debt in the portfolio are Kodak, $18,900; Sara Lee, $16,500; and Sony, $63,000. Year 3 Feb. 27 Purchased bonds of Microsoft for $161,000. June 21 Sold all of the notes of Sony for $61,200. June 30 Purchased bonds of Black & Decker for $54,900. Aug. 3 Sold all of the notes of Sara Lee for $13,800. Nov. 1 Sold all of the bonds of Kodak for $23,400. Dec. 31 Fair values for debt in the portfolio are Black & Decker, $57,300; and Microsoft, $159,500.
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 15.8EX
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Problem 15-2A Recording, adjusting, and reporting available-for-sale debt securities LO P3
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Mead Inc. 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
| Jan. | 20 | Purchased Johnson & Johnson bonds for $25,000. | ||
| Feb. | 9 | Purchased notes of Sony for $59,490. | ||
| June | 12 | Purchased bonds of Mattel for $45,000. | ||
| Dec. | 31 | Fair values for debt in the portfolio are Johnson & Johnson, $26,900; Sony, $49,050; and Mattel, $55,950. |
Year 2
| Apr. | 15 | Sold all of the bonds of Johnson & Johnson for $28,000. | ||
| July | 5 | Sold all of the bonds of Mattel for $39,000. | ||
| July | 22 | Purchased notes of Sara Lee for $17,100. | ||
| Aug. | 19 | Purchased bonds of Kodak for $18,450. | ||
| Dec. | 31 | Fair values for debt in the portfolio are Kodak, $18,900; Sara Lee, $16,500; and Sony, $63,000. |
Year 3
| Feb. | 27 | Purchased bonds of Microsoft for $161,000. | ||
| June | 21 | Sold all of the notes of Sony for $61,200. | ||
| June | 30 | Purchased bonds of Black & Decker for $54,900. | ||
| Aug. | 3 | Sold all of the notes of Sara Lee for $13,800. | ||
| Nov. | 1 | Sold all of the bonds of Kodak for $23,400. | ||
| Dec. | 31 | Fair values for debt in the portfolio are Black & Decker, $57,300; and Microsoft, $159,500. |
Transcribed Image Text:Problem 15-2A Part 2
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
12/31/Yr. 1
12/31/Yr. 2
12/31/Yr. 3
Long-Term AFS Securities (cost)
Fair value adjustment-AFS
Long-Term AFS Securities (Fair value)
$
$
$
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