Question
Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $110 million of 10% bonds, dated January 1, on January 1, 2013. Management intends to include
Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $110 million of 10% bonds, dated January 1, on January 1, 2013. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $94 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 $100 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 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. Round your answers to 2 decimal places.) General Journal Debit Credit 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 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2013, balance sheet? (Do not round your intermediate calculations. Enter your answer in millions.) Investment $ million 4-b. Prepare an entry necessary to achieve the reporting objective in 4-a. (Do not round your intermediate calculations.Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.) General Journal Debit Credit 5. How would Fuzzy Monkey's 2013 statement of cash flows be affected by this investment? (Leave no cells blank - be certain to enter "0" wherever required. 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 $ Investing cash flow $
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