Question

Fuzzy Monkey Technologies, Inc., purchased as a short-term investment $150 million of 6% bonds, dated January 1, on January 1, 2021 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 $133 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 $140 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 any 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.) Complete this question by entering your answers in the tabs below. Reg 1 to 3 Reg 4A Reg 4B Reg 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.) (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).)

Answer 1

Anwed Bond T bond is one of better investment option to invertor to invert the supply's funts in quailability of raph Bond I will provite the interest in the securities face value. It is the fixed payment where a inflow probability is the secured and also the realized gains or losses will have to incured if bond is a short term It is the good the investment opljong to the investor. Relevant Journal Entries on the respective dates fuzzy Monkey Technologies Inc Axchanel bords on discount for $ 17 million It has purchanel bon' on discount as bondo face I value is geregter than the actual price poitie (150 million > 133 million Discount which is which_receiver it should be qmoxbized over the Uite of bond Joynal Entries of purchase of investment and interest received are as follows:

Furey monkey Jornal Technologh Entries Tac I Debit (81 codic (92 -D II SO000000 legte - Particulars | Investment in 8% Burt's Ali - To Discount on Investment in 6% ends To Cash All (Being to record the investment made in the bonds with discount receivel) 17000000 133000000 30/11 Cash Ale Dr4500000 Discount 00_ Snvestm-onl_19_9_17_boobs_de_aret 820000 - To Inteert revenue Ale (Being to record the interest received from bons and amortization of discount) 5310000 52 52300 Cash Alo - on. 4500000 Loiscount on Investment in 6% Bonds Ale ... 852800 - To Interest Revenue Ala (being to record the interest received from boots L 44de amortizat409 of 1540494) 160072,800 1160673300 working_Notes : Amalgytin Scholyle of Dicaret - Toty Ogle Interest (3% of 150 milling ) Effective Interest Discount | : (4% of 0/5 Bq) qqce) 10. C-B Outstynsing | Oglance Of Bogel's E 6320000 820000 4114500000 4500000 | 133000000 1339 20000 134572800 53 52 800 852800 :

What amount will fuzzy monkey reports its iqueshment fin the December 3, 2014 Balance sheel. ? fyzzy Monkey Technologies Inc will reports its Invertrag in 6% Bonds on December 31, 2011 Bilance sheet at $ 140 million . _ Becaure the investment in bonds of 6% 15 an investment in short term, 4chivebodingportfolio_Any gain on loss in fyir value qujulment should go to the profit and loss acount. _46 Enly Necessary to achieve reporting_eb echten In such scenarjo, we will have to calculate the unrealined gain or los for holding of seapitics. It is quulated by: Unrealized Holding & fair valye as - Outstanding 911 / Loss on Dec. 3) Bylove of Igreat taugt on Dec 31 3 Orreglized G919_(Helly) = $ ( 140000000 - 134671306 $_5327 200 Journal Entry Date I credits Toebil ($ Dr. 5327200 - Partjulges || 31/144 fair value Adiystencent_ale - To vareplies Halling Gelin Als Lebeing to record unrelized holling ggin of bonls on december 31, 2011) 5327200 70671. 532720C 5327200

5 fuzzy moghey's wil there invertnet statement of 9th flow I be affected by Cash Flow statement is the statement of cash flows from Var loys qituites like operqh9g, investing 90!_f11996199.- Operating Achiy tes_4re_ the actiujhes of_opeaģtions of Oxg99124609 -- I questing Achytjas_14clyue igueslimenke in the bands, investment, et fond Einpaching Alliy ties are the activities_ton_issuing stock, livrents, etc - Gh flow statement can be prepared by the two methods Javest method yad Inujied method. Affection to the statement of cash flows by this investment @ Operating Activities > Direct Method → company received igbewest دند/f طكو هل کو خط راه by 14.5+4,5). Jean : 9 miljons. 7 Gsh Inflow direct Method > in Indirect Method we cool/ have to mphe qu jestment of the interest received with unregli ued gain got the effedive interest. ::: Aljysement : Int. - fume. t Eft.) laun Intl 9-15.32727 (5.32 + 5:3528) - (7 milljón). - Igresting Aschuitjes Gaping ngle iqvestmeglis 7 $123 milj-g - Gul = oyplou