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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
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 $28,500. |
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February 9 | Purchased Sony notes for $62,640. |
June 12 | Purchased Mattel bonds for $48,500. |
December 31 | Fair values for debt in the portfolio are Johnson & Johnson, $31,100; Sony, $53,150 and Mattel, $56,950. |
Year 2
April 15 | Sold all of the Johnson & Johnson bonds for $31,500. |
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July 5 | Sold all of the Mattel bonds for $41,450. |
July 22 | Purchased Sara Lee notes for $19,900. |
August 19 | Purchased Kodak bonds for $20,900. |
December 31 | Fair values for debt in the portfolio are Kodak, $22,125 Sara Lee, $20,000 and Sony, $64,000. |
Year 3
February 27 | Purchased Microsoft bonds for $159,600. |
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June 21 | Sold all of the Sony notes for $64,000. |
June 30 | Purchased Black & Decker bonds for $58,400. |
August 3 | Sold all of the Sara Lee notes for $16,950. |
November 1 | Sold all of the Kodak bonds for $25,675. |
December 31 | Fair values for debt in the portfolio are Black & Decker, $59,400 and Microsoft, $160,200. |
Problem 15-2A (Algo) Part 3
3. Complete the following 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. (Losses should be indicated by a minus sign.)
Year 1 Year 2 Year 3 Realized gains (losses) Sale of Johnson & Johnson Sale of Mattel Sale of Sony Sale of Sara Lee Sale of Kodak Total realized gains (losses) 0 0 0 Unrealized gains (losses) at year-endStep by Step Solution
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