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Problem 1 5 - 2 A Recording , adjusting, and reporting available - for - sale debt securities P 3 Mead Inc. began operations in

Problem 15-2ARecording, adjusting, and reporting available-for-sale debt securitiesP3Mead 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 1Jan.20Purchased Johnson & Johnson bonds for $20,500.Feb.9Purchased Sony notes for $55,440.June12Purchased Mattel bonds for $40,500.Dec.31Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350.Year 2Apr.15Sold all of the Johnson & Johnson bonds for $23,500.July5Sold all of the Mattel bonds for $35,850.July22Purchased Sara Lee notes for $13,500.Aug.19Purchased Kodak bonds for $15,300.Dec.31Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000.Year 3Feb.27Purchased Microsoft bonds for $160,800.June21Sold all of the Sony notes for $57,600.June30Purchased Black & Decker bonds for $50,400.Aug.3Sold all of the Sara Lee notes for $9,750.Nov.1Sold all of the Kodak bonds for $20,475.Dec.31Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600.Required1.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.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.Check(2b) Fair Value Adj. bal.: 12/31/Year 1, $3,910 Dr.; 12/31/Year 2, $5,085 Dr.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.(3b) Unrealized Gain at 12/31/Year 3, $2,000Problem 15-2ARecording, adjusting, and reporting available-for-sale debt securitiesP3Mead 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 1Jan.20Purchased Johnson & Johnson bonds for $20,500.Feb.9Purchased Sony notes for $55,440.June12Purchased Mattel bonds for $40,500.Dec.31Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350.Year 2Apr.15Sold all of the Johnson & Johnson bonds for $23,500.July5Sold all of the Mattel bonds for $35,850.July22Purchased Sara Lee notes for $13,500.Aug.19Purchased Kodak bonds for $15,300.Dec.31Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000.Year 3Feb.27Purchased Microsoft bonds for $160,800.June21Sold all of the Sony notes for $57,600.June30Purchased Black & Decker bonds for $50,400.Aug.3Sold all of the Sara Lee notes for $9,750.Nov.1Sold all of the Kodak bonds for $20,475.Dec.31Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600.Required1.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.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.Check(2b) Fair Value Adj. bal.: 12/31/Year 1, $3,910 Dr.; 12/31/Year 2, $5,085 Dr.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.(3b) Unrealized Gain at 12/31/Year 3, $2,000Check(2b) Fair Value Adj. bal.: 12/31/Year 1, $3,910 Dr.; 12/31/Year 2, $5,085 Dr.(3b) Unrealized Gain at 12/31/Year 3, $2,000

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