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Problem 15-2A (Algo) Recording, adjusting, and reporting available-for-sale debt securities LO P3
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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 $28,000.
February 9 Purchased Sony notes for $62,190.
June 12 Purchased Mattel bonds for $48,000.
December 31 Fair values for debt in the portfolio are Johnson & Johnson, $30,500; Sony, $52,850; and Mattel, $57,650.
Year 2
April 15 Sold all of the Johnson & Johnson bonds for $31,000.
July 5 Sold all of the Mattel bonds for $41,100.
July 22 Purchased Sara Lee notes for $17,500.
August 19 Purchased Kodak bonds for $20,550.
December 31 Fair values for debt in the portfolio are Kodak, $19,950; Sara Lee, $19,500; and Sony, $65,000.
Year 3
February 27 Purchased Microsoft bonds for $159,800.
June 21 Sold all of the Sony notes for $63,600.
June 30 Purchased Black & Decker bonds for $57,900.
August 3 Sold all of the Sara Lee notes for $16,500.
November 1 Sold all of the Kodak bonds for $25,350.
December 31 Fair values for debt in the portfolio are Black & Decker, $59,100; and Microsoft, $160,100.
Problem 15-2A (Algo) 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.)