Solution 1 to 3:
Journal Entries - Fuzzy Monkey Technologies Inc. | ||||
Event | Date | Particulars | Debit (In Million) | Credit (In Million) |
1 | 01-Jan-18 | Investment in Bond Dr | $210.00 | |
To Cash | $192.00 | |||
To Discount on bond investment | $18.00 | |||
(Being investment in bond recorded) | ||||
2 | 30-Jun-18 | Cash Dr ($210* 6% * 6/12) | $6.30 | |
Discount on bond investment Dr | $1.38 | |||
To Interest revenue ($192*8%*6/12) | $7.68 | |||
(Being revenue recoginition for bond interest and discount amortized) | ||||
3 | 31-Dec-18 | Cash Dr ($210* 6% * 6/12) | $6.30 | |
Discount on bond investment Dr | $1.44 | |||
To Interest revenue [($192 + $1.38)*8%*6/12] | $7.74 | |||
(Being revenue recoginition for bond interest and discount amortized) |
Solution 4a:
Investment to be reported = $200 millions
Solution 4b:
Journal Entries - Fuzzy Monkey Technologies Inc. | ||||
Event | Date | Particulars | Debit (In Million) | Credit (In Million) |
1 | 31-Dec-18 | Fair value adjustment Dr ($200 - $192 - $1.38 - $1.44) | $5.18 | |
To Unrealized holding gain or loss - NI | $5.18 | |||
(Being adjusting entry to record investment at fair value) |
Solution 5:
Statement of cash flows (Partial) For 2018 |
||
Particulars | Amount (In million) | |
Cash flow from operating activities: | ||
Short term investment | $192.00 | |
Less: Interest received | $12.60 | |
Net cash flow from operating activities | $179.40 | Outflow |
Cash flow from investing activities: | $0.00 |
Problem 12-2 (Algo) Trading securities; bond investment; effective interest [LO12-1, 12-3] Fuzzy Monkey Technologies, Inc., purchased...
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