Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $ 210 million of 6% bonds, dated January 1, on January 1, 2016. Management intends to

Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $ 210 million of 6% bonds, dated January 1, on January 1, 2016. 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 $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, 2016, was $200 million.

Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).)

4.1 At what amount will Fuzzy Monkey report its investment in the December 31, 2016, balance sheet? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).)

4.2 Prepare the entry necessary to achieve this reporting objective. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places, (i.e., 5,500,000 should be entered as 5.50).)

5. How would Fuzzy Monkey's 2016 statement of cash flows be affected by this investment? (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing With The Computer

Authors: Wayne S. Boutell

1st Edition

0520363329, 978-0520363328

More Books

Students also viewed these Accounting questions

Question

Was ignoring the problem an option? Why?

Answered: 1 week ago