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 $28,200. February 9 Purchased Sony notes for $64,890. June 12 Purchased Mattel bonds for $50,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $33,500; Sony, $53,350; and Mattel, $58,750. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $33,500. July 5 Sold all of the Mattel bonds for $42,850. July 22 Purchased Sara Lee notes for $20,500. August 19 Purchased Kodak bonds for $22,300. December 31 Fair values for debt in the portfolio are Kodak, $22,825; Sara Lee, $22,000; and Sony, $66,000. Year 3 February 27 Purchased Microsoft bonds for $159,800. June 21 Sold all of the Sony notes for $65,600. June 30 Purchased Black & Decker bonds for $60,400. August 3 Sold all of the Sara Lee notes for $18,750. November 1 Sold all of the Kodak bonds for $26,975. December 31 Fair values for debt in the portfolio are Black & Decker, $60,600; and Microsoft, $160,600. 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.)
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 $28,200. February 9 Purchased Sony notes for $64,890. June 12 Purchased Mattel bonds for $50,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $33,500; Sony, $53,350; and Mattel, $58,750. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $33,500. July 5 Sold all of the Mattel bonds for $42,850. July 22 Purchased Sara Lee notes for $20,500. August 19 Purchased Kodak bonds for $22,300. December 31 Fair values for debt in the portfolio are Kodak, $22,825; Sara Lee, $22,000; and Sony, $66,000. Year 3 February 27 Purchased Microsoft bonds for $159,800. June 21 Sold all of the Sony notes for $65,600. June 30 Purchased Black & Decker bonds for $60,400. August 3 Sold all of the Sara Lee notes for $18,750. November 1 Sold all of the Kodak bonds for $26,975. December 31 Fair values for debt in the portfolio are Black & Decker, $60,600; and Microsoft, $160,600. 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.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 21E: On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be...
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Transcribed Image Text:ead Incorporated began operations in Year 1. Following is
series of transactions and events involving its long-term
bt investments in available-for-sale securities.
ar 1
anuary 20 Purchased Johnson & Johnson bonds for
$28,200.
ebruary 9
Purchased Sony notes for $64,890.
June 12 Purchased Mattel bonds for $50,500.
cember 31 Fair values for debt in the portfolio are
Johnson & Johnson, $33,500; Sony, $53,350;
and Mattel, $58,750.
ar 2
April 15
Sold all of the Johnson & Johnson bonds for
$33,500.
July 5 Sold all of the Mattel bonds for $42,850.
July 22 Purchased Sara Lee notes for $20,500.
August 19 Purchased Kodak bonds for $22,300.
cember 31
Fair values for debt in the portfolio are
Kodak, $22,825; Sara Lee, $22,000; and Sony,
$66,000.
ar 3
bruary 27 Purchased Microsoft bonds for $159,800.
June 21 Sold all of the Sony notes for $65,600.
June 30 Purchased Black & Decker bonds for $60,400.
August 3 Sold all of the Sara Lee notes for $18,750.
ovember 1 Sold all of the Kodak bonds for $26,975.
cember 31 Fair values for debt in the portfolio are
Black & Decker, $60,600; and Microsoft,
$160,600.
nplete the following table that summarizes the (a)
ost, (b) total fair value adjustment, and (c) total fair
of the portfolio of long-term available-for-sale debt
ties at each year-end. (Loss amounts should be
ted with a minus sign.)
Debt Investments
n AFS Securities (cost)
> adjustment-AFS
n AFS Securities (Fair value)
Answer is complete but not entirely correct.
12/31/Year
1
$ 143,590
$
2,010✔
145,600
$
$
12/31/Year 2
107,690
2,595 x
110,285
12/31/Year 3
$ 220,200✔
1,000
221,200
$
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
$28,200.
Purchased Sony notes for $64,890.
Purchased Mattel bonds for $50,500.
Fair values for debt in the portfolio are
Johnson & Johnson, $33,500; Sony, $53,350;
and Mattel, $58,750.
February 9
June 12
December 31
Year 2
April 15
Sold all of the Johnson & Johnson bonds for
$33,500.
July 5
Sold all of the Mattel bonds for $42,850.
July 22 Purchased Sara Lee notes for $20,500.
August 19 Purchased Kodak bonds for $22,300.
December 31
Fair values for debt in the portfolio are
Kodak, $22,825; Sara Lee, $22,000; and Sony,
$66,000.
Year 3
February 27 Purchased Microsoft bonds for $159,800.
June 21 Sold all of the Sony notes for $65,600.
June 30 Purchased Black & Decker bonds for $60,400.
August 3 Sold all of the Sara Lee notes for $18,750.
November 1 Sold all of the Kodak bonds for $26,975.
December 31 Fair values for debt in the portfolio are
Black & Decker, $60,600; and Microsoft,
$160,600.
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)
Answer is complete but not entirely correct
12/31/Year
1
$ 143,590✔ $
2,010
$ 145,600 $
12/31/Year 2
12/31/Yea
107,690 $ 220,
2,595 x
1,
221,
110,285
$
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