Problem 15-2A (Algo) Recording, adjusting, and reporting available-for-sale debt securities LO P3

Skip to question

[The following information applies to the questions displayed below.]

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.
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.
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.
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 2

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.

Note: Loss amounts should be indicated with a minus sign.