Problem $15-2$A $($Static$)$ Recording, adjusting, and reporting available$-$for$-$sale debt securities LO P$3$

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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.$

Problem $15-2$A $($Static$)$ Part $1$

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$.$