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 $23,500. February 9 Purchased Sony notes for $58,140. June 12 Purchased Mattel bonds for $43,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,100; Sony, $48,150; and Mattel, $54,150. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $26,500. July 5 Sold all of the Mattel bonds for $37,950. July 22 Purchased Sara Lee notes for $14,900. August 19 Purchased Kodak bonds for $17,400. December 31 Fair values for debt in the portfolio are Kodak, $18,375; Sara Lee, $15,000; and Sony, $61,000. Year 3 February 27 Purchased Microsoft bonds for $159,600. June 21 Sold all of the Sony notes for $60,000. June 30 Purchased Black & Decker bonds for $53,400. August 3 Sold all of the Sara Lee notes for $12,450. November 1 Sold all of the Kodak bonds for $22,425. December 31 Fair values for debt in the portfolio are Black & Decker, $56,400; and Microsoft, $159,200. 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.
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 $23,500. February 9 Purchased Sony notes for $58,140. June 12 Purchased Mattel bonds for $43,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,100; Sony, $48,150; and Mattel, $54,150. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $26,500. July 5 Sold all of the Mattel bonds for $37,950. July 22 Purchased Sara Lee notes for $14,900. August 19 Purchased Kodak bonds for $17,400. December 31 Fair values for debt in the portfolio are Kodak, $18,375; Sara Lee, $15,000; and Sony, $61,000. Year 3 February 27 Purchased Microsoft bonds for $159,600. June 21 Sold all of the Sony notes for $60,000. June 30 Purchased Black & Decker bonds for $53,400. August 3 Sold all of the Sara Lee notes for $12,450. November 1 Sold all of the Kodak bonds for $22,425. December 31 Fair values for debt in the portfolio are Black & Decker, $56,400; and Microsoft, $159,200. 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.
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 $23,500.
February 9 Purchased Sony notes for $58,140.
June 12 Purchased Mattel bonds for $43,500.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,100; Sony, $48,150; and Mattel,
$54,150.
Year 2
April 15
July 5
July 22 Purchased Sara Lee notes for $14,900.
August 19 Purchased Kodak bonds for $17,400.
December 31 Fair values for debt in the portfolio are Kodak, $18,375; Sara Lee, $15,000; and Sony, $61,000.
Year 3
Sold all of the Johnson & Johnson bonds for $26,500.
Sold all of the Mattel bonds for $37,950.
February 27 Purchased Microsoft bonds for $159,600.
June 21 Sold all of the Sony notes for $60,000.
June 30 Purchased Black & Decker bonds for $53,400.
August 3 Sold all of the Sara Lee notes for $12,450.
November 1 Sold all of the Kodak bonds for $22,425.
December 31 Fair values for debt in the portfolio are Black & Decker, $56,400; and Microsoft, $159,200.
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.
Complete this question by entering your answers in the tabs below.
Year 1
Year 2
Year 3
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