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. Req 1 to 3 Req 4A Req 4B Req 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.) Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal place, (ie., 5,500,000 should be entered as 5.5). Operating cash flow $ 10 8 million Investing cash flow $ 1600 million
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. Req 1 to 3 Req 4A Req 4B Req 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.) Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal place, (ie., 5,500,000 should be entered as 5.5). Operating cash flow $ 10 8 million Investing cash flow $ 1600 million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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.
Req 1 to 3
Req 4A
Req 4B
Req 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.)
Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to
1 decimal place, (ie., 5,500,000 should be entered as 5.5).
Operating cash flow
$
10 8 million
Investing cash flow
$
1600 million
<Req 48
Show less](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F79eb2d7b-ebdf-427e-a917-4756dc35fa9a%2Fff81a40b-fb86-4f9c-a3c4-2eb3d15cd239%2F4n378u_processed.jpeg&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.
Req 1 to 3
Req 4A
Req 4B
Req 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.)
Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to
1 decimal place, (ie., 5,500,000 should be entered as 5.5).
Operating cash flow
$
10 8 million
Investing cash flow
$
1600 million
<Req 48
Show less
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