Problem $12-1($Static$)$ Securities held$-$to$-$maturity; bond investment; effective interest;

financial statement effects LO$12-1,12-2]$

Fuzzy Monkey Technologies, Incorporated purchased as a long$-$term investment $$80$ million of $8\%$ bonds,

dated January $1,$ on January $1,2024.$ Management has the positive intent and ability to hold the bonds until

maturity. 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 $31,2024,$ was $$70$ million.

Required:

to $3.$ Prepare the relevant journal entries on the respective dates $($record the interest at the effective rate$).$

At what amount will Fuzzy Monkey report its investment in the December $31,2024$ balance sheet?

How would Fuzzy Monkey's $2024$ statement of cash flows be affected by this investment? $($If more than one

approach is possible, indicate the one that is most likely.$)$

Complete this question by entering your answers in the tabs below.

Req $1$ to $3$

Prepare the relevant journal entries on the respective dates $($record the interest at the effective rate$).$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Entel

millions rounded to $2$ decimal places, $($i$.$e$.,5,500,000$ should be entered as $5\mathrm{.}50).$