Question
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
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 $23,000. | ||
Feb. | 9 | Purchased notes of Sony for $57,690. | ||
June | 12 | Purchased bonds of Mattel for $43,000. | ||
Dec. | 31 | Fair values for debt in the portfolio are Johnson & Johnson, $26,500; Sony, $47,850 and Mattel, $53,050. |
Year 2
Apr. | 15 | Sold all of the bonds of Johnson & Johnson for $26,000. | ||
July | 5 | Sold all of the bonds of Mattel for $37,600. | ||
July | 22 | Purchased notes of Sara Lee for $14,500. | ||
Aug. | 19 | Purchased bonds of Kodak for $17,050. | ||
Dec. | 31 | Fair values for debt in the portfolio are Kodak, $18,200 Sara Lee, $14,500 and Sony, $61,000. |
Year 3
Feb. | 27 | Purchased bonds of Microsoft for $159,800. | ||
June | 21 | Sold all of the notes of Sony for $59,600. | ||
June | 30 | Purchased bonds of Black & Decker for $52,900. | ||
Aug. | 3 | Sold all of the notes of Sara Lee for $12,000. | ||
Nov. | 1 | Sold all of the bonds of Kodak for $22,100. | ||
Dec. | 31 | Fair values for debt in the portfolio are Black & Decker, $56,100 and Microsoft, $159,100. |
Problem 15-2A 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.
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