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 bonds of Johnson & Johnson for $20,500.

Feb. 9 Purchased notes of Sony for $55,440.

June 12 Purchased bonds of Mattel for $40,500.

Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350.

Year 2

Apr. 15 Sold all of the bonds of Johnson & Johnson for $23,500.

July 5 Sold all of the bonds of Mattel for $35,850.

July 22 Purchased notes of Sara Lee for $13,500.

Aug. 19 Purchased bonds of Kodak for $15,300.

Dec. 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000.

Year 3

Feb. 27 Purchased bonds of Microsoft for $160,800.

June 21 Sold all of the notes of Sony for $57,600.

June 30 Purchased bonds of Black & Decker for $50,400.

Aug. 3 Sold all of the notes of Sara Lee for $9,750.

Nov. 1 Sold all of the bonds of Kodak for $20,475.

Dec. 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600.

Required

1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale debt securities.

2. Prepare a 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.

3. Prepare a table that summarizes (a) the realized gains and losses and (b) the unrealized gains or losses for the portfolio of long-term available-for-sale debt securities at each year-end.