Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $190 million of 8% bonds, dated January 1, on January 1, 2013. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $169 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, 2013, was $180 million.

Required:

1.	Prepare the journal entry to record Fuzzy Monkeys investment on January 1, 2013. (Enter your answers in millions.)

General Journal	Debit	Credit
(Click to select)Gain on sale of investmentsInvestment revenueInvestment in bondsBonds payableCashDiscount on bond investmentInterest revenueLoss on sale of investments
(Click to select)Gain on sale of investmentsInvestment in bondsLoss on sale of investmentsDiscount on bond investmentBonds payableCashInvestment revenueInterest revenue
(Click to select)Loss on sale of investmentsCashDiscount on bond investmentInvestment in bondsInterest revenueInvestment revenueGain on sale of investmentsBonds payable

2.	Prepare the journal entry by Fuzzy Monkey to record interest on June 30, 2013 (at the effective rate). (Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places.)

General Journal	Debit	Credit
(Click to select)Sales revenueCashDiscount on bond investmentBonds payableGain on sale of investmentsLoss on sale of investmentsInterest revenueInvestment in bonds
(Click to select)Loss on sale of investmentsCashInvestment in bondsBonds payableInterest revenueGain on sale of investmentsSales revenueDiscount on bond investment
(Click to select)Sales revenueBonds payableCashInvestment in bondsLoss on sale of investmentsGain on sale of investmentsInterest revenueDiscount on bond investment

3.	Prepare the journal entry by Fuzzy Monkey to record interest on December 31, 2013 (at the effective rate). (Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places.)

General Journal	Debit	Credit
(Click to select)Discount on bond investmentLoss on sale of investmentsInterest revenueInvestment in bondsCashSales revenueGain on sale of investmentsBonds payable
(Click to select)Bonds payableInvestment in bondsSales revenueInterest revenueGain on sale of investmentsCashLoss on sale of investmentsDiscount on bond investment
(Click to select)Gain on sale of investmentsCashDiscount on bond investmentInterest revenueBonds payableLoss on sale of investmentsInvestment in bondsSales revenue

4.	At what amount will Fuzzy Monkey report its investment in the December 31, 2013, balance sheet? (Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places.)

Investments

$ million

5.	How would Fuzzy Monkey's 2013 statement of cash flows be affected by this investment? (Do not round your intermediate calculations. Enter your answers in millions rounded to 1 decimal place. Input all amounts as positive values.)

Operating cash flow	$ (Click to select)outflowinflow
Investing cash flow	$ (Click to select)outflowinflow