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Problem 12-2 (Algo) Trading securities; bond investment; effective interest; financial statement effects [LO12-1, 12-3] Fuzzy Monkey Technologies, Incorporated purchased as a short-term investment $210 million
Problem 12-2 (Algo) Trading securities; bond investment; effective interest; financial statement effects [LO12-1, 12-3] Fuzzy Monkey Technologies, Incorporated purchased as a short-term investment $210 million of 6% bonds, dated January 1 , on January 1, 2024. Management intends to include the investment in a short-term, active trading portfolio. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $192 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 $200 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, 2024 balance sheet? 4-b. Prepare any entry necessary to achieve this reporting objective. 5. 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.) Answer is not complete. Complete this question by entering your answers in the tabs below. 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.) Note: Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5)
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