Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $220 million of 8% bonds, dated January 1, on January 1, 2021. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was 10%. The price paid for the bonds was $201 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 $210 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, 2021, balance sheet?
4-b. Prepare the entry necessary to achieve this reporting objective.
5. How would Fuzzy Monkey's 2021 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the one that is most likely.)
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $220 million of 8% bonds, dated January 1, on January 1, 2021. ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Carla has been directed by her regional marketing manager to cut prices on seasonal items, place an ad in the local paper, and tell distributors to reduce deliveries for the next month.
Answers (1)
Closing entries are necessary for Question 11 options: a. permanent accounts only. b. temporary accounts only. c. both permanent and temporary accounts. d. permanent or real accounts only.
Answers (1)
Smith Law Firm specializes in the preparation of wills for estate planning. On October 1, 2021, the company begins operations by issuing stock for $12,000 and obtaining a loan from a local bank for $24,000.
Answers (1)
There were a total of 90 people in the households, 10 of the people were children under 16, 10 of the people were retired but still capable of working, 35 people had full-time jobs, 5 had part-time jobs, 5 were stay-at-home parents, 5 were full-time
Answers (1)
MIS is a business function, like accounting or sales, which moves information about people, products, and processes across the company to facilitate decision making and problem solving. What does MIS stands for? a. Management Information Strategy. b.
Answers (1)
New Questions in Business
The amount of interest (i) karl will earn on the amount of principal (p) he has in his bank account is found by using the formula i = prt, with r representing the rate of interest and t the time the money will be in the account.
Answers (1)
You bring your lunch to your part-time job instead of spending $8 on lunch. You put the $8 in your savings account. This is an example of opportunity cost. True. False
Answers (1)
The Kellys are planning for a retirement home. They estimate they will need $200,000 4 years from now to purchase this home. Assuming an interest rate of 10%, what amount must be deposited at the end of each of the 4 years to fund the home price?
Answers (1)
Gipple Corporation makes a product that uses a material with the quantity standard of 7.8 grams per unit of output and the price standard of $6.50 per gram. In January the company produced 3,900 units using 25,370 grams of the direct material.
Answers (1)
For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2018 for $3,250,000.
Answers (1)