### Investment Transactions and Portfolio Evaluation#### 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 9:** 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 of Realized and Unrealized Gains/Losses| **Year** | **Year 1** | **Year 2** | **Year 3** ||----------|-------------|------------|------------|| **Realized gains (losses)** | | | || Sale of Johnson & Johnson | $28,200 | $33,500 | $0 || Sale of Mattel | | | || Sale of Sony | | | || Sale of Sara Lee | | | || Sale of Kodak | | | || **Total realized gains (losses)** | $

Bond: - Bonds are the loan agreement between the bond issuer and an investor, in which the bond…

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 July 5 July 22 Sold all of the Johnson & Johnson bonds for $33,500. Sold all of the Mattel bonds for $42,850. 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. 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 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 July 5 July 22 Sold all of the Johnson & Johnson bonds for $33,500. Sold all of the Mattel bonds for $42,850. 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. 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.)

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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On January 1. Year 1 Residence Company issued bonds with a $50,000 face value. The bonds were issued at 96 resulting in a 4% discount. They had a 20 year term and a stated rate of interest of 7% Based on this information, the carrying value of the bond liability on January 1, Year 6 is Multiple Choice $50.000 D147,500 $48,000 $48.500
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Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued $14,180,000 of 25-year, 12% callable bonds on March 1, 20Y2, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. 20Y2 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Paid the interest on the bonds. 20Y4 Sept. 1 Called the bond issue at 104, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank. Journalize the entries to record the above selected transactions. Issued the bonds for cash at their face amount. 20Y2 Mar. 1 Paid the interest on the bonds. 20Y2 Sept. 1 Called the bond issue at 104, the rate provided in the bond indenture. (Omit entry for payment of interest.)