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

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[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 $28,000.
February 9	Purchased Sony notes for $62,190.
June 12	Purchased Mattel bonds for $48,000.
December 31	Fair values for debt in the portfolio are Johnson & Johnson, $30,500; Sony, $52,850 and Mattel, $57,650.

Year 2

April 15	Sold all of the Johnson & Johnson bonds for $31,000.
July 5	Sold all of the Mattel bonds for $41,100.
July 22	Purchased Sara Lee notes for $17,500.
August 19	Purchased Kodak bonds for $20,550.
December 31	Fair values for debt in the portfolio are Kodak, $19,950 Sara Lee, $19,500 and Sony, $65,000.

Year 3

February 27	Purchased Microsoft bonds for $159,800.
June 21	Sold all of the Sony notes for $63,600.
June 30	Purchased Black & Decker bonds for $57,900.
August 3	Sold all of the Sara Lee notes for $16,500.
November 1	Sold all of the Kodak bonds for $25,350.
December 31	Fair values for debt in the portfolio are Black & Decker, $59,100 and Microsoft, $160,100.

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. (Loss amounts should be indicated with a minus sign.)

Debt Investments12/31/Year 112/31/Year 212/31/Year 3

Long-Term AFS Securities

tLong-Term AFS Securities (Fair value)