Recording, adjusting, and reporting available-for-sale debt securities P3 Paris Inc. began operations in Year 1. Following...

 

Transcribed Image Text:

Recording, adjusting, and reporting available-for-sale debt securities P3 Paris 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 Mar. 10 Purchased Apple bonds for $30,600. Apr. 7 Purchased Ford notes for $56,250. Sep. 1 Purchased Polaroid bonds for $28,200. Dec. 31 Fair values for debt in the portfolio are Apple, $33,000; Ford, $54,600; and Polaroid, $29.400. Year 2 Apr. 26 Sold all of the Ford notes for $51,250. June 2 Purchased Duracell bonds for $34,650. June 14 Purchased Sears notes for $25,200. Nov. 27 Sold all of the Polaroid bonds for $30,600. Dec. 31 Fair values for debt in the portfolio are Apple, $31,000; Duracell, $32,400; and Sears, $27,600. Year 3 Jan. 28 Purchased Coca-Cola bonds for $40,000. Aug. 22 Sold all of the Apple bonds for $25,800. Sep. Oct. 3 Purchased Motorola notes for $84,000. 9 Sold all of the Sears notes for $28,800. Sold all of the Duracell bonds for $27,000. Oct. 31 Dec. 31 Fair values for debt in the portfolio are Coca-Cola, $48,000, and Motorola, $82,000. Required 1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale debt securities. 2. Prepare a table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value for the portfolio of long-term available-for-sale debt securities at each year-end. Check (26) Fair Value Adj. bal: 12/31/Year 1, $1,950 Dr.; 12/31/Year 2, $550 Dr. 3. Prepare a 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. (3b) Unrealized Gain at 12/31/Year 3, $6,000 Recording, adjusting, and reporting available-for-sale debt securities P3 Paris 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 Mar. 10 Purchased Apple bonds for $30,600. Apr. 7 Purchased Ford notes for $56,250. Sep. 1 Purchased Polaroid bonds for $28,200. Dec. 31 Fair values for debt in the portfolio are Apple, $33,000; Ford, $54,600; and Polaroid, $29.400. Year 2 Apr. 26 Sold all of the Ford notes for $51,250. June 2 Purchased Duracell bonds for $34,650. June 14 Purchased Sears notes for $25,200. Nov. 27 Sold all of the Polaroid bonds for $30,600. Dec. 31 Fair values for debt in the portfolio are Apple, $31,000; Duracell, $32,400; and Sears, $27,600. Year 3 Jan. 28 Purchased Coca-Cola bonds for $40,000. Aug. 22 Sold all of the Apple bonds for $25,800. Sep. Oct. 3 Purchased Motorola notes for $84,000. 9 Sold all of the Sears notes for $28,800. Sold all of the Duracell bonds for $27,000. Oct. 31 Dec. 31 Fair values for debt in the portfolio are Coca-Cola, $48,000, and Motorola, $82,000. Required 1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale debt securities. 2. Prepare a table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value for the portfolio of long-term available-for-sale debt securities at each year-end. Check (26) Fair Value Adj. bal: 12/31/Year 1, $1,950 Dr.; 12/31/Year 2, $550 Dr. 3. Prepare a 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. (3b) Unrealized Gain at 12/31/Year 3, $6,000

Answer rating: 100% (QA)

Answer 1 Journal Entries Year 1 Mar 10 Debit AvailableforSale Debt Securities Apple bonds 30600 Cred... View the full answer