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how do i find the price paid for the bonds in this problem? Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $100 million of
how do i find the price paid for the bonds in this problem?
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $100 million of 6\%, 10-year bonds, dated January 1, on January 1, 2021. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $ ? million. Interest is received semiannually on June 30 and December 31 . Due to changing market conditions, the fair value of the bonds at December 31,2021 , was $95 million. Required: 1. Prepare the journal entry to record Fuzzy Monkey's investment on January 1 , 2021. 2. Prepare the journal entry by Fuzzy Monkey to record interest on June 30,2021 (at the effective rate). 3. Prepare the journal entry by Fuzzy Monkey to record interest on December 31 , 2021 (at the effective rate). 4. At what amount will Fuzzy Monkey report its investment in the December 31 , 2021 balance sheet? Why Step by Step Solution
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