Problem 12-1 (Algo) Securities held-to-maturity; bond investment; effective interest; financial statementeffects [LO12-1, 12-2]Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $120 million of 6% bonds, dated January 1, on January1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity themarket yield was 8%. The price paid for the bonds was $100 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 $110 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.)Complete this question by entering your answers in the tabs below.Req 1 to 3Reg 4Answer is complete but not entirely correct.Req 5At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet?Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places (i.e, 5,500,000should be entered as 5.50).Investment4,08 milion< Req 1 to 3Req 5 >

One of the three essential financial statements is the statement of cash flows, sometimes known as…

Answered: Problem 12-1 (Algo) Securities…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Req 1 to 3 Req 4 At what amount will Federal report the bonds among its liabilities in the December 31, 2024, balance sheet? Note: Round your final answer to the nearest whole dollar. Bonds amount that will be reported on balance sheet at December 31, 2024
PRACTICE QUESTIONS 1-3 1.A company issued 5%, 20-year bonds with a face amount of $80 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? 2.A company issued 6%, 15-year bonds with a face amount of $75 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? 3. A company issued 5%, 20-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 4%. Interest is paid semiannually. At what price did the bonds sell?
RCISES i S Exercise 14-17A (Algo) Computing bond interest and price; recording bond issuance LO C2 Brin Company issues bonds with a par value of $700,000. The bonds mature in 6 years and pay 6% annual interest in semiannual payments. The annual market rate for the bonds is 8%. (Table B.1 Table B.2, Table B.3, and Table B.4) Note: Use appropriate factor(s) from the tables provided. 1. Compute the price of the bonds as of their issue date. 2. Prepare the journal entry to record the bonds' issuance. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the price of the bonds as of their issue date. Note: Round all table values to 4 decimal places, and use the rounded table values in calculations. Round intermediate calculations to the nearest dollar amount. Table Values are Based on: Cash Flow Par (maturity) value Interest (annuity) Price of bonds n = i= Table Value Amount Required 1 Present Value $ Saved Required 2 > 0
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3. What is the equity component arising from the issuance of bonds payable? A. 450,000 B. 500,000 C. 620,000 D. 0 E. None of the above
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Problem #4 On February 1, 2021 Leslie's Linguine Ltd. purchased 630, 10-yr, $1,000 bonds for an amount which would generate a 5.0% annual rate of return. The bonds pay interest at an annual rate of 5.2% and the investment was purchased at a price Interest payments are made semi-annually on Feb. 1st and Aug. 1st. The investment is classified as Held to Maturity Securities. 1-Feb-21 Bond purchase 1-Aug-21 First semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. 31-Dec-21 The bonds are trading at $1,014 as of December 31, 2021 which is the company's year end. Interest is accrued. 1-Feb-22 Second semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. Instructions: Draft the appropriatejournal entries for the dates listed above.
Exercise 14-14 (Algo) New debt issues; offerings announcements [LO14-2] When companies offer new debt security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the debt offerings reported in December 2024: New Securities Issues Corporate National Equipment Transfer Corporation—$212 million bonds via lead managers Second Tennessee Bank N.A. and Morgan, Dunavant & Company, according to a syndicate official. Terms: maturity, December 15, 2033; coupon 7.58%; issue price, par; yield, 7.58%; noncallable; debt ratings: Ba-1 (Moody's Investors Service, Incorporated), BBB+ (Standard & Poor's). IgWig Incorporated—$362 million of notes via lead manager Stanley Brothers, Incorporated, according to a syndicate official. Terms: maturity, December 1, 2035; coupon, 6.58%; Issue price, 99; yield, 6.68%; call date, NC; debt ratings: Baa-1 (Moody's Investors Service, Incorporated), A (Standard & Poor's).…
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24.AAA had the following information (PV Factor round off to four decimal places, other amounts round off always to whole number) Face Amount -P3,000,000 Date of Bonds – January 1, 2023 Date of Maturity – P1,000,000 annually starting December 31, 2023 Acquisition Date – January 1, 2023 Nominal Rate – 10% Effective Rate – 12% Interest Payment – December 31 Compute the Carrying Amount of the Investment in Bond on January 1, 2023

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