debt investments in available-for-sale securities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $25,500.
February 9
Purchased Sony notes for $59,940.
June 12 Purchased Mattel bonds for $45,500.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $29,500; Sony, $49,350; and Mattel,
$54,750.
Year 2
April 15
July 5
July 22
Purchased Sara Lee notes for $15,500.
August 19 Purchased Kodak bonds for $18,800.
December 31 Fair values for debt in the portfolio are Kodak, $19,075; Sara Lee, $17,000; and Sony, $62,000.
Sold all of the Johnson & Johnson bonds for $28,500.
Sold all of the Mattel bonds for $39,350.
Year 3
February 27 Purchased Microsoft bonds for $159,800.
June 21 Sold all of the Sony notes for $61,600.
June 30 Purchased Black & Decker bonds for $55,400.
August 3 Sold all of the Sara Lee notes for $14,250.
November 1 Sold all of the Kodak bonds for $23,725.
December 31 Fair values for debt in the portfolio are Black & Decker, $57,600; and Microsoft, $159,600.
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 Investments
Long-Term AFS Securities (cost)
Fair value adjustment-AFS
Long-Term AFS Securities (Fair value)
12/31/Year 1
$
0 $
12/31/Year 2
0
12/31/Year 3
$
EA
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8868685d-db6b-42ee-8763-d30829dbb190%2F54cf1c78-1af1-4ead-8495-73d93830ee53%2Ftjgl5ldj_processed.png&w=3840&q=75)
Transcribed Image Text:[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 $25,500.
February 9
Purchased Sony notes for $59,940.
June 12 Purchased Mattel bonds for $45,500.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $29,500; Sony, $49,350; and Mattel,
$54,750.
Year 2
April 15
July 5
July 22
Purchased Sara Lee notes for $15,500.
August 19 Purchased Kodak bonds for $18,800.
December 31 Fair values for debt in the portfolio are Kodak, $19,075; Sara Lee, $17,000; and Sony, $62,000.
Sold all of the Johnson & Johnson bonds for $28,500.
Sold all of the Mattel bonds for $39,350.
Year 3
February 27 Purchased Microsoft bonds for $159,800.
June 21 Sold all of the Sony notes for $61,600.
June 30 Purchased Black & Decker bonds for $55,400.
August 3 Sold all of the Sara Lee notes for $14,250.
November 1 Sold all of the Kodak bonds for $23,725.
December 31 Fair values for debt in the portfolio are Black & Decker, $57,600; and Microsoft, $159,600.
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 Investments
Long-Term AFS Securities (cost)
Fair value adjustment-AFS
Long-Term AFS Securities (Fair value)
12/31/Year 1
$
0 $
12/31/Year 2
0
12/31/Year 3
$
EA
0
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