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Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $230 million of 10% bonds, dated January...

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Accounting

Fuzzy Monkey Technologies, Inc., purchased as a long-terminvestment $230 million of 10% bonds, dated January 1, on January1, 2021. Management intends to have the investment available forsale when circumstances warrant. For bonds of similar risk andmaturity the market yield was 12%. The price paid for the bonds was$210 million. Interest is received semiannually on June 30 andDecember 31. Due to changing market conditions, the fair value ofthe bonds at December 31, 2021, was $220 million.

Required:
1. to 3. Prepare the relevant journal entries onthe respective dates (record the interest at the effectiverate).
4-a. At what amount will Fuzzy Monkey report itsinvestment in the December 31, 2021, balance sheet?
4-b. Prepare the entry necessary to achieve thisreporting objective.
5. How would Fuzzy Monkey's 2021 statement of cashflows be affected by this investment? (If more than one approach ispossible, indicate the one that is most likely.)

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