Required information Problem 15-2A Recording, adjusting, and reporting available-for-sale debt securities LO P3 [The following information applies to the questions displayed below.) Mead 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 1 Jan. 20 Purchased Johnson & Johnson bonds for $24,000. Feb. 9 Purchased notes of Sony for $58,590. June 12 Purchased bonds of Mattel for $44, eee. Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $25,700; Sony, 548,450; and Mattel, 556,650. Year 2 Apr. 15 Sold all of the bonds of Johnson & Johnson for $27,000. July 5 Sold all of the bonds of Mattel for $38,300. July 22 Purchased notes of Sara Lee for $16,300. Aug. 19 Purchased bonds of Kodak for $17,750. Dec. 31 Fair values for debt in the portfolio are Kodak, $18,550; Sara Lee, $15,500; and Sony, $63,200. Year 3 Feb. 27 Purchased bonds of Microsoft for $159,400. June 21 Sold all of the notes of Sony for 560,400. June 30 Purchased bonds of Black & Decker for $53,900. Aug. 3 Sold all of the notes of Sara Lee for $12,900. Nov. 1 Sold all of the bonds of Kodak for $22,750. Dec. 31 Fair values for debt in the portfolio are Black & Decker, 356,700; and Microsoft, $159,300. AB 1 Jan. 20 Purchased Johnson & Johnson bonds for $24,000. Feb. 9 Purchased notes of Sony for $58,590. June 12 Purchased bonds of Mattel for $44,000. Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $25,700; Sony, $48,450; and Mattel, $56,050. Year 2 Apr. 15 Sold all of the bonds of Johnson & Johnson for $27,000 July 5 Sold all of the bonds of Mattel for $33,300. July 22 Purchased notes of Sara Lee for $16,300. Aug. 19 Purchased bonds of Kodak for $17,750. Dec. 31 Fair values for debt in the portfolio are Kodak, $18,550; Sara Lee, 515,500; and Sony, $63,000. Year 3 Feb. 27 Purchased bonds of Microsoft for $159,400. June 21 sold all of the notes of Sony for $60,400 June 30 Purchased bonds of Black & Decker for 553,900. Aug. 3 Sold all of the notes of Sara Lee for $12,900. Nov. 1 Sold all of the bonds of Kodak for $22,750. Dec. 31 Fair values for debt in the portfolio are Black & Decker, 556,700; and Microsoft, $159,300. Problem 15-2A 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.) 12031/7.1 12/31/Yr. 2 12/31/Yr. 3 Debt investments Long Term AFS Securities Cost Fair value adjustment-AFS Long Term AFS Securities Fair value 5 0 Apr. 15 Sold all of the bonds of Johnson & Johnson for $27,000. July 5 Sold all of the bonds of Mattel for $38,300. July 22 Purchased notes of Sara Lee for $16,300. Aug. 19 Purchased bonds of Kodak for $17,750. Dec. 31 Fair values for debt in the portfolio are Kodak, $18,550; Sara Lee, $15,500; and Sony, $63,800. Year 3 Feb. 27 Purchased bonds of Microsoft for $159,400. June 21 Sold all of the notes of Sony for $60,400. June 30 Purchased bonds of Black & Decker for $53,900. Aug. 3 Sold all of the notes of Sara Lee for $12,900. Nov. 1 Sold all of the bonds of Kodak for $22,750. Dec. 31 Fair values for debt in the portfolio are Black & Decker, $56,700; and Microsoft, $159,380. Problem 15-2A 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) Unrealized gains (losses) at year-end $ 0 $ 0 $ Problem 15-4A Recording, adjusting, and reporting stock investments with insignificant influence LO P4 [The following information applies to the questions displayed below] Rose Company had no short-term investments prior to this year. It had the following transactions this year involving short- term stock investments with insignificant influence. Apr. 16 Purchased 4,000 shares of Gem Co. stock at $21.50 per share. July 7 Purchased 2,000 shares of PepsiCo stock at $49.00 per share. 20 Purchased 1,000 shares of Xerox stock at $17.00 per share. Aug. 15 Received a(n) $0.99 per share cash dividend on the Gem Co. stock. 28 Sold 2,000 shares of Gem Co. stock at $28.25 per share. Oct. 1 Received a $1.90 per share cash dividend on the PepsiCo shares. Dec. 15 Received a $1.05 per share cash dividend on the remaining Gem Co. shares. 31 Received a $1.20 per share cash dividend on the PepsiCo shares. Problem 15-4A Part 2 2. Prepare a table to compare the year-end cost and fair values of Rose's short-term stock investments. The year-end fair values per share are Gem Co., $23.75: PepsiCo, $46.25. and Xerox, $14.00. Comparison of Cost and Fair Values for Stock Investments Portfolio at Year-End Cost Fair Value Unrealized Amount Gem Co Pepsi Co Xerox Total 5 0 $ 0 Apr. 16 Purchased 4,000 shares of Gem Co. stock at $21.50 per share. July 7 Purchased 2,000 shares of PepsiCo stock at $49.00 per share. 20 Purchased 1,000 shares of Xerox stock at $17.00 per share. Aug. 15 Received a(n) $0.99 per share cash dividend on the Gem Co. stock. 28 Sold 2,000 shares of Gem Co. stock at $28.25 per share. Oct. 1 Received a $1.90 per share cash dividend on the PepsiCo shares. Dec. 15 Received a $1.05 per share cash dividend on the remaining Gem Co. shares. 31 Received a $1.20 per share cash dividend on the PepsiCo shares. Problem 15-4A Part 3 3. Prepare an adjusting entry to record the year-end fair value adjustment for the portfolio of short-term stock investr View transaction list Journal entry worksheet Record the year-end adjusting entry for the securities portfolio as of December 31. Note: Enter debits before credits. Debit Credit Date General Journal Dec 31