1 to 3
prepare journal enteries as follows:
Date | Accounts title & Explanation | Debit $ (in millions) | Credit $ (millions) |
1-jan 2021 | investment in bonds(face value) | 160 | |
Discount on bond investment | 18 | ||
cash (purchase price of bonds) | 142 | ||
30-june | cash (4% * 160million) | 6.4 | |
Discount on bond investment | 0.7 | ||
interest revenue(5% * 142) | 7.1 | ||
31-dec | cash(4% * 160million) | 6.4 | |
Discount on bond investment | 0.735 | ||
interest revenue(5% * 142+0.7) | 7.135 | ||
Calculate values in above journal enteries as follows:-
Date | Accounts title & Explanation | Debit | Credit |
1 | investment in bonds(face value) | 160 | |
2 | Discount on bond investment | =3-1 | |
3 | cash (purchase price of bonds) | 142 | |
4 | |||
5 | cash (4% * 160million) | =160*4% | |
6 | Discount on bond investment | =6-7 | |
7 | interest revenue(5% * 142) | =142*5% | |
8 | |||
9 | cash(4% * 160million) | 160*4% | |
10 | Discount on bond investment | 11-9 | |
11 | interest revenue(5% * 142+0.7) | (142+0.7)*5% | |
4.
Investment will be reported in the balancesheet as follows:- |
(in millions) | |
Investment in bonds | 160 |
Less:Discount (18-0.7-0.735) | 16.565 |
Amortized Cost | 143.435 |
Note: Investment will be reported in the balancesheet at its amortized cost | |
5.
The cashflow statement will be affected by this investment as follows:-
Operating cashflow | $12.8 millions | inflow |
Investing cashflow | $142 millions | outflow |
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $160 million of 8% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $160 million of 8% bonds, dated January 1, on January 1, 2021. 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 $142 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $140 million of 10% bonds, dated January 1, on January 1, 2021. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $124 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $180 million of 6% bonds, dated January 1, on January 1, 2021. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $160 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $150 million of 6% bonds, dated January 1, on January 1, 2021. Management has the positive intent and ability to hold the bonds until maturity. 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $120 million of 6% bonds, dated January 1 on January 1 2018 Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $100 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, 2018,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $90 million of 6% bonds, dated January 1, on January 1, 2018. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $73 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, 2018,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $210 million of 6% bonds, dated January 1, on January 1, 2018 Management has the positive intent and ability to hold the bonds until maturity. 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, 2018,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $ 160 million of 8% bonds, dated January , on January 1, 2018. 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 $142 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, 2018,...
Che Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $10 million of 8% bonds, dated January 1, on January 1, 2018. 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 $82 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $200 million of 10% 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 12%. The price paid for the bonds was $178 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...