Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $210 million of 6% bonds, dated January 1, on January 1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $192 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2024, was $200 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet? 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible. indicate the one that is most likely.)
Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $210 million of 6% bonds, dated January 1, on January 1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $192 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2024, was $200 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet? 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible. indicate the one that is most likely.)
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
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Question
![Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $210 million of 6% bonds, dated January 1, on January
1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the
market yield was 8%. The price paid for the bonds was $192 million. Interest is received semiannually on June 30 and December 31.
Due to changing market conditions, the fair value of the bonds at December 31, 2024, was $200 million.
Required:
1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet?
5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible,
indicate the one that is most likely.)
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req 1 to 31
Reg 5
Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round t
Intermediate calculations. Enter your answers in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as
5.50).
No
1
2
Req 4
3
Date
January 01, 2024
June 30, 2024
General Journal
Investment in bonds
Cash
Discount on bond investment
Cash
Discount on bond investment
Interest revenue
December 31, 202, Cash
Discount on bond investment i
Interest revenue
000
•
***
333
Debit
210,000.00
Credit
18,000.00
192,000.00
Show less A](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F095ea013-5eb7-4aaf-a23a-6e29389c2c79%2F0318af4c-3008-4c99-a51f-31f3acb3d323%2Fmn2316_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $210 million of 6% bonds, dated January 1, on January
1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the
market yield was 8%. The price paid for the bonds was $192 million. Interest is received semiannually on June 30 and December 31.
Due to changing market conditions, the fair value of the bonds at December 31, 2024, was $200 million.
Required:
1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet?
5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible,
indicate the one that is most likely.)
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req 1 to 31
Reg 5
Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round t
Intermediate calculations. Enter your answers in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as
5.50).
No
1
2
Req 4
3
Date
January 01, 2024
June 30, 2024
General Journal
Investment in bonds
Cash
Discount on bond investment
Cash
Discount on bond investment
Interest revenue
December 31, 202, Cash
Discount on bond investment i
Interest revenue
000
•
***
333
Debit
210,000.00
Credit
18,000.00
192,000.00
Show less A
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