Problem 12-3 (Algo) Securities available-for-sale; bond investment, effective interest; financial statement effects [LO12-1, 12-4] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $60 million of 6% bonds, dated January 1, on Janua 1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $46 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 $50 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet? 4-b. Prepare the entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (f more than one approach is possible. indicate the one that is most likely) Complete this question by entering your answers in the tabs below. Reg 1 to 3 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.) Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Operating cash flow Investing cash flow Req 4A Reg 48 $ S 10.8 million 160 0 million Req 5
Problem 12-3 (Algo) Securities available-for-sale; bond investment, effective interest; financial statement effects [LO12-1, 12-4] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $60 million of 6% bonds, dated January 1, on Janua 1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $46 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 $50 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet? 4-b. Prepare the entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (f more than one approach is possible. indicate the one that is most likely) Complete this question by entering your answers in the tabs below. Reg 1 to 3 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.) Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Operating cash flow Investing cash flow Req 4A Reg 48 $ S 10.8 million 160 0 million Req 5
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Problem 12-3 (Algo) Securities available-for-sale; bond investment; effective interest; financial
statement effects [LO12-1, 12-4]
Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $60 million of 6% bonds, dated January 1, on Janua
1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and
maturity the market yield was 8%. The price paid for the bonds was $46 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 $50 million.
Required:
1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
4-6. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet?
4-b. Prepare the entry necessary to achieve this reporting objective.
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.
Reg 1 to 3 Req 4A
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.)
Reg 4B
Operating cash flow
Investing cash flow
Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to
1 decimal place, (i.e., 5,500,000 should be entered as 5.5).
$
$
Req 5
10.8 million
1600 million
<Req 4B
Req 5
Show less A](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faee78b46-58df-4273-9bbd-2926e8defdfb%2Fa3c5e38e-3611-462b-96d7-783b6bf6556e%2Fpixcrj3_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 12-3 (Algo) Securities available-for-sale; bond investment; effective interest; financial
statement effects [LO12-1, 12-4]
Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $60 million of 6% bonds, dated January 1, on Janua
1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and
maturity the market yield was 8%. The price paid for the bonds was $46 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 $50 million.
Required:
1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).
4-6. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet?
4-b. Prepare the entry necessary to achieve this reporting objective.
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.
Reg 1 to 3 Req 4A
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.)
Reg 4B
Operating cash flow
Investing cash flow
Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to
1 decimal place, (i.e., 5,500,000 should be entered as 5.5).
$
$
Req 5
10.8 million
1600 million
<Req 4B
Req 5
Show less A
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