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Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $140 million of 10% bonds, dated January 1, on January 1, 2018. Management intends to include
Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $140 million of 10% bonds, dated January 1, on January 1, 2018. 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 $124 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, 2018, was $130 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, 2018, balance sheet? 4-b. Prepare any entry necessary to achieve this reporting objective 5. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment? 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 2018 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.) Operating cash flow 14.0 million 0.0 million outflow Investing cash flow $ inflow K Req 4B Req 5
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