Required information Problem 15-2A Recording, adjusting, and reporting available-for-sale debt securities LO P3 [The following information applies to the questions displayed below.] Mead 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 Jan. 20 Purchased Johnson & Johnson bonds for $28,500. Feb. 9 Purchased notes of Sony for $62,640. June 12 Purchased bonds of Mattel for $48,500. Dec. 31 Fair values for debt in the portfolio are Johnson & Johnson, $31,100; Sony, $53, 150; and Mattel, $56,950. Year 2 Apr. 15 Sold all of the bonds of Johnson & Johnson for $31,500. July 5 Sold all of the bonds of Mattel for $41,450. July 22 Purchased notes of Sara Lee for $19,900. Aug. 19 Purchased bonds of Kodak for $20,900. Dec. 31 Fair values for debt in the portfolio are Kodak, $22,125; Sara Lee, $20,000; and Sony, $64,000. Year 3 Feb. 27 Purchased bonds of Microsoft for $159,600. June 21 sold all of the notes of Sony for $64,000. June 30 Purchased bonds of Black & Decker for $58,400. Aug. 3 Sold all of the notes of Sara Lee for $16,950. Nov. 1 Sold all of the bonds of Kodak for $25,675. Dec. 31 Fair values for debt in the portfolio are Black & Decker, $59,400; and Microsoft, $160,200. Year 1 Year 2 Year 3 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. No General Journal Credit Date Jan 20 Debit 28,500 1 Debt investments - AFS Cash 28,500 Feb 09 62,640 Debt investments - AFS Cash 62,640 Jun 12 48,500 Debt investments - AFS Cash 48,500 Dec 31 Fair value adjustment - AFS Unrealized gain - Equity Year 1 Year 2 Year 3 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. Credit No 1 Date Apr 15 Debit 31,500 General Journal Cash Gain on sale of debt investments Debt investments - AFS 3,000 28,500 2 Jul 05 Cash Loss on sale of debt investments Debt investments - AFS 41,450 7,050 48,500 Jul 22 19,900 Debt investments - AFS Cash 19,900 Aug 19 20,900 Debt investments - AFS Cash 20,900 Dec 31 Fair value adjustment - AFS Unrealized gain - Equity General Journal Credit No 1 Date Feb 27 Debit 159,600 Debt investments - AFS Cash 159,600 Jun 21 64,000 Cash Gain on sale of debt investments Debt investments - AFS 1,360 62,640 Jun 30 58,400 Debt investments - AFS Cash 58,400 Aug 03 Cash Loss on sale of debt investments Debt investments - AFS 16,950 2,950 19,900 Nov 01 25,675 Cash Gain on sale of debt investments Debt investments - AFS 4,775 20,900 Dec 31 Fair value adjustment - AFS Unrealized gain - Equity