Required information Problem 15-2A (Algo) Recording, adjusting, and reporting available-for-sale debt securities LO P3 [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 $27,500. February 9 Purchased Sony notes for $61,740. June 12 Purchased Mattel bonds for $47,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $29,900; Sony, $52,550; and Mattel, $57,450. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $30,500. July 5 Sold all of the Mattel bonds for $40,750. July 22 Purchased Sara Lee notes for $17,100. August 19 Purchased Kodak bonds for $20,200. December 31 Fair values for debt in the portfolio are Kodak, $19,775; Sara Lee, $19,000; and Sony, $65,000. Year 3 February 27 Purchased Microsoft bonds for $159,000. June 21 Sold all of the Sony notes for $63,200. June 30 Purchased Black & Decker bonds for $57,400. August 3 Sold all of the Sara Lee notes for $16,050. November 1 Sold all of the Kodak bonds for $25,025. December 31 Fair values for debt in the portfolio are Black & Decker, $58,800; and Microsoft, $160,000. Problem 15-2A (Algo) Part 1 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.