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 1January 20Purchased Johnson & Johnson bonds for $20,500.February 9Purchased Sony notes for $55,440.June 12Purchased Mattel bonds for $40,500.December 31Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350.Year 2April 15Sold all of the Johnson & Johnson bonds for $23,500.July 5Sold all of the Mattel bonds for $35,850.July 22Purchased Sara Lee notes for $13,500.August 19Purchased Kodak bonds for $15,300.December 31Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000.Year 3February 27Purchased Microsoft bonds for $160,800.June 21Sold all of the Sony notes for $57,600.June 30Purchased Black & Decker bonds for $50,400.August 3Sold all of the Sara Lee notes for $9,750.November 1Sold all of the Kodak bonds for $20,475.December 31Fair values for debt in the portfolio are Black & Decker, $54,600, and Microsoft, $158,600.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.Year 1, year 2, and year 3

A journal entry is the act of maintaining or producing records of any economic or non-economic…

Answered: Year 1 January 20 Purchased Johnson &…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

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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	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.

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.

Year 1, year 2, and year 3

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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 Johns