Problem 15-2A Recording, adjusting, and reporting available-for-sale debt securities LO P3 Skip to question [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 $25,000. Feb. 9 Purchased notes of Sony for $59,490. June 12 Purchased bonds of Mattel for $45,000. Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $26,900; Sony, $49,050; and Mattel, $55,950. Year 2 Apr. 15 Sold all of the bonds of Johnson & Johnson for $28,000. July 5 Sold all of the bonds of Mattel for $39,000. July 22 Purchased notes of Sara Lee for $17,100. Aug. 19 Purchased bonds of Kodak for $18,450. Dec. 31 Fair values for debt in the portfolio are Kodak, $18,900; Sara Lee, $16,500; and Sony, $63,000. Year 3 Feb. 27 Purchased bonds of Microsoft for $161,000. June 21 Sold all of the notes of Sony for $61,200. June 30 Purchased bonds of Black & Decker for $54,900. Aug. 3 Sold all of the notes of Sara Lee for $13,800. Nov. 1 Sold all of the bonds of Kodak for $23,400. Dec. 31 Fair values for debt in the portfolio are Black & Decker, $57,300; and Microsoft, $159,500.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 15-2A Recording, adjusting, and reporting available-for-sale debt securities LO P3

Skip to question

[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 $25,000.
Feb.	9	Purchased notes of Sony for $59,490.
June	12	Purchased bonds of Mattel for $45,000.
Dec.	31	Fair values for debt in the portfolio are Johnson & Johnson, $26,900; Sony, $49,050; and Mattel, $55,950.

Year 2

Apr.	15	Sold all of the bonds of Johnson & Johnson for $28,000.
July	5	Sold all of the bonds of Mattel for $39,000.
July	22	Purchased notes of Sara Lee for $17,100.
Aug.	19	Purchased bonds of Kodak for $18,450.
Dec.	31	Fair values for debt in the portfolio are Kodak, $18,900; Sara Lee, $16,500; and Sony, $63,000.

Year 3

Feb.	27	Purchased bonds of Microsoft for $161,000.
June	21	Sold all of the notes of Sony for $61,200.
June	30	Purchased bonds of Black & Decker for $54,900.
Aug.	3	Sold all of the notes of Sara Lee for $13,800.
Nov.	1	Sold all of the bonds of Kodak for $23,400.
Dec.	31	Fair values for debt in the portfolio are Black & Decker, $57,300; and Microsoft, $159,500.

**Problem 15-2A Part 3**

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.)**

| | Year 1 | Year 2 | Year 3 |
|--------------------------------|--------|--------|--------|
| **Realized gains (losses)** | | | |
| Sale of Johnson & Johnson | | | |
| Sale of Mattel | | | |
| Sale of Sony | | | |
| Sale of Sara Lee | | | |
| Sale of Kodak | | | |
| **Total realized gains (losses)** | $0 | $0 | $0 |
| **Unrealized gains (losses) at year-end** | | | |

The table is structured to capture financial information over three years for various sales of debt securities. It categorizes gains and losses into "Realized gains (losses)" for completed sales and "Unrealized gains (losses)" for valuations yet to be realized at each year's end. Each company listed represents a transaction requiring data entry for financial reporting.

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