Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $80 million of 8% 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 10%. The price paid for the bonds was $66 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 $70 million.

Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). (Journal Entry)

- Record Fuzzy Monkeys investment on bonds on January 1, 2018.

- Record the interest revenue on June 30, 2018.

- Record the interest revenue on December 31, 2018

4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet?

Investment

million

4-b. Prepare any entry necessary to achieve this reporting objective. (Journal Entry)

5. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment?

Operating cash flow		million
Investing cash flow		million