investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $23,500. July 5 Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara Lee notes for $9,750. November 1 Sold all of the Kodak bonds for $20,475. December 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600. 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.) 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 Year 1 Year 2 Year 3
investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $23,500. July 5 Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara Lee notes for $9,750. November 1 Sold all of the Kodak bonds for $20,475. December 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600. 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.) 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 Year 1 Year 2 Year 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 $20,500.
February 9 Purchased Sony notes for $55,440.
June 12 Purchased Mattel bonds for $40,500.
December 31
Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350.
Year 2
April 15
July 5
July 22
August 19 Purchased Kodak bonds for $15,300.
Purchased Sara Lee notes for $13,500.
December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000.
Sold all of the Johnson & Johnson bonds for $23,500.
Sold all of the Mattel bonds for $35,850.
Year 3
February 27 Purchased Microsoft bonds for $160,800.
June 21 Sold all of the Sony notes for $57,600.
June 30 Purchased Black & Decker bonds for $50,400.
August 3 Sold all of the Sara Lee notes for $9,750.
November 1 Sold all of the Kodak bonds for $20,475.
December 31 Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600.
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.)
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
Year 1
Year 2
Year 3
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