### Transactions and Events Involving Long-Term Debt Investments in Available-for-Sale Securities**Year 1**- January 20: Purchased Johnson & Johnson bonds for $28,200.- February 9: Purchased Sony notes for $64,890.- June 12: Purchased Mattel bonds for $50,500.- December 31: Fair values for debt in the portfolio are: - Johnson & Johnson, $33,500 - Sony, $53,350 - Mattel, $58,750**Year 2**- April 15: Sold all of the Johnson & Johnson bonds for $33,500.- July 5: Sold all of the Mattel bonds for $42,850.- July 22: Purchased Sara Lee notes for $20,500.- August 19: Purchased Kodak bonds for $22,300.- December 31: Fair values for debt in the portfolio are: - Kodak, $22,825 - Sara Lee, $22,000 - Sony, $66,000**Year 3**- February 27: Purchased Microsoft bonds for $159,800.- June 21: Sold all of the Sony notes for $65,600.- June 30: Purchased Black & Decker bonds for $60,400.- August 3: Sold all of the Sara Lee notes for $18,750.- November 13: Sold all of the Kodak bonds for $26,975.- December 31: Fair values for debt in the portfolio are: - Black & Decker, $60,600 - Microsoft, $160,000### Table CompletionComplete the following table that summarizes the (a) 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 | 12/31/Year 1 | 12/31/Year 2 | 12/31/Year 3 ||---------------------------------------|--------------|--------------|--------------|| AFS Securities (cost) | $143,590 | $107,690 | $220,200 || Adjustment—AFS | $2,010 | $2,595 | $1,000 ### Long-Term Debt Investments in Available-for-Sale SecuritiesMead Incorporated began operations in Year 1. Below is an outline of 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 $28,200.- **February 9:** Purchased Sony notes for $64,890.- **June 12:** Purchased Mattel bonds for $50,500.- **December 31:** Fair values for debt in the portfolio are: - Johnson & Johnson: $33,500 - Sony: $53,350 - Mattel: $58,750#### Year 2- **April 15:** Sold all of the Johnson & Johnson bonds for $33,500.- **July 5:** Sold all of the Mattel bonds for $42,850.- **July 22:** Purchased Sara Lee notes for $20,500.- **August 19:** Purchased Kodak bonds for $22,300.- **December 31:** Fair values for debt in the portfolio are: - Kodak: $22,825 - Sara Lee: $22,000 - Sony: $66,000#### Year 3- **February 27:** Purchased Microsoft bonds for $159,800.- **June 21:** Sold all of the Sony notes for $65,600.- **June 30:** Purchased Black & Decker bonds for $60,400.- **August 3:** Sold all of the Sara Lee notes for $18,750.- **November 1:** Sold all of the Kodak bonds for $26,975.- **December 31:** Fair values for debt in the portfolio are: - Black & Decker: $60,600 - Microsoft: $160,600#### Summary TableStudents are required to complete the table below, which summarizes the following for each year-end: - **Total cost** of long-term available-for-sale securities- **Total fair value adjustment**- **Total fair value** of the portfolioThe table also clarifies that loss amounts should be indicated with a minus sign.| Debt Investments | 12/31/Year 1 | 12/31/Year 2 | 12/31/Year 3 ||------------------------------------|--------------|--------------|--------------

When there is a significant discrepancy between the fair value and the existing book value of an…

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 $28,200. February 9 Purchased Sony notes for $64,890. June 12 Purchased Mattel bonds for $50,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $33,500; Sony, $53,350; and Mattel, $58,750. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $33,500. July 5 Sold all of the Mattel bonds for $42,850. July 22 Purchased Sara Lee notes for $20,500. August 19 Purchased Kodak bonds for $22,300. December 31 Fair values for debt in the portfolio are Kodak, $22,825; Sara Lee, $22,000; and Sony, $66,000. Year 3 February 27 Purchased Microsoft bonds for $159,800. June 21 Sold all of the Sony notes for $65,600. June 30 Purchased Black & Decker bonds for $60,400. August 3 Sold all of the Sara Lee notes for $18,750. November 1 Sold all of the Kodak bonds for $26,975. December 31 Fair values for debt in the portfolio are Black & Decker, $60,600; and Microsoft, $160,600. 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.)

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q