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 $23,500. February 9 Purchased Sony notes for $58,140. June 12 Purchased Mattel bonds for $43,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,100; Sony, $48,150; and Mattel, $54,150. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $26,500. July 5 Sold all of the Mattel bonds for $37,950. July 22 Purchased Sara Lee notes for $14,900. August 19 Purchased Kodak bonds for $17,400. December 31 Fair values for debt in the portfolio are Kodak, $18,375; Sara Lee, $15,000; and Sony, $61,000. Year 3 February 27 Purchased Microsoft bonds for $159,600. June 21 Sold all of the Sony notes for $60,000. June 30 Purchased Black & Decker bonds for $53,400. August 3 Sold all of the Sara Lee notes for $12,450. November 1 Sold all of the Kodak bonds for $22,425. December 31 Fair values for debt in the portfolio are Black & Decker, $56,400; and Microsoft, $159,200. 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 $23,500. February 9 Purchased Sony notes for $58,140. June 12 Purchased Mattel bonds for $43,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,100; Sony, $48,150; and Mattel, $54,150. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $26,500. July 5 Sold all of the Mattel bonds for $37,950. July 22 Purchased Sara Lee notes for $14,900. August 19 Purchased Kodak bonds for $17,400. December 31 Fair values for debt in the portfolio are Kodak, $18,375; Sara Lee, $15,000; and Sony, $61,000. Year 3 February 27 Purchased Microsoft bonds for $159,600. June 21 Sold all of the Sony notes for $60,000. June 30 Purchased Black & Decker bonds for $53,400. August 3 Sold all of the Sara Lee notes for $12,450. November 1 Sold all of the Kodak bonds for $22,425. December 31 Fair values for debt in the portfolio are Black & Decker, $56,400; and Microsoft, $159,200. 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.
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
Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity
Section: Chapter Questions
Problem 5RE
Related questions
Question
Don't give answer in image format
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 $23,500.
February 9 Purchased Sony notes for $58,140.
June 12 Purchased Mattel bonds for $43,500.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,100; Sony, $48,150; and Mattel,
$54,150.
Year 2
April 15
July 5
July 22 Purchased Sara Lee notes for $14,900.
August 19 Purchased Kodak bonds for $17,400.
December 31 Fair values for debt in the portfolio are Kodak, $18,375; Sara Lee, $15,000; and Sony, $61,000.
Year 3
Sold all of the Johnson & Johnson bonds for $26,500.
Sold all of the Mattel bonds for $37,950.
February 27 Purchased Microsoft bonds for $159,600.
June 21 Sold all of the Sony notes for $60,000.
June 30 Purchased Black & Decker bonds for $53,400.
August 3 Sold all of the Sara Lee notes for $12,450.
November 1 Sold all of the Kodak bonds for $22,425.
December 31 Fair values for debt in the portfolio are Black & Decker, $56,400; and Microsoft, $159,200.
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.
Complete this question by entering your answers in the tabs below.
Year 1
Year 2
Year 3
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 7 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning