Problem 12-1 (Algo) Securities held-to-maturity; bond investment; effective interest; financial statementeffects [LO12-1, 12-2]Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $120 million of 6% bonds, dated January 1, on January1, 2024. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity themarket 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, 2024, was $110 million.Required:1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet?5. How would Fuzzy Monkey's 2024 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.Req 1 to 3Reg 4Answer is complete but not entirely correct.Req 5At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet?Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places (i.e, 5,500,000should be entered as 5.50).Investment4,08 milion< Req 1 to 3Req 5 >

One of the three essential financial statements is the statement of cash flows, sometimes known as…

Answered: Problem 12-1 (Algo) Securities…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 26P

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Problem 12 - 1 (Algo) Securities held - to - maturity; bond investment; effective interest; financial statement effects [LO12-1, 12-2] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment S 200 million of 10% bonds, dated January 1, on January 1, 2024. 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 $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, 2024, was $190 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet? 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the…
Problem 12-3 (Algo) Securities available-for-sale; bond investment; effective interest; financial statement effects [LO12-1, 12-4] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $60 million of 6% bonds, dated January 1, on Janua 1, 2024. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $46 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, 2024, was $50 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-6. At what amount will Fuzzy Monkey report its investment in the December 31, 2024, balance sheet? 4-b. Prepare the entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by…
Problem 12-1 (Static) Securities held-to-maturity; bond investment; effective interest; financial statement effects [LO12-1, 12-2] Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. 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 $66 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, 2024, was $70 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4. At what amount will Fuzzy Monkey report its investment in the December 31, 2024 balance sheet? 5. How would Fuzzy Monkey's 2024 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the one that…
Problem 1 On July 1, 2014, Norren Company paid P1, 198, 000 for 10% bonds with a face amount of P1, 000, 000 to be held to maturity. Interest is paid on June 30 and December 31. The bonds were purchased to yield 8%. The entity used the effective interest method to recognize interest income from this investment. What is the carrying amount of the bond investment on December 31, 2014? a. 1, 207, 900 b. 1, 198, 000 c. 1, 195, 920 d. 1, 193, 050
Problem #4 On February 1, 2021 Leslie's Linguine Ltd. purchased 630, 10-yr, $1,000 bonds for an amount which would generate a 5.0% annual rate of return. The bonds pay interest at an annual rate of 5.2% and the investment was purchased at a price Interest payments are made semi-annually on Feb. 1st and Aug. 1st. The investment is classified as Held to Maturity Securities. 1-Feb-21 Bond purchase 1-Aug-21 First semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. 31-Dec-21 The bonds are trading at $1,014 as of December 31, 2021 which is the company's year end. Interest is accrued. 1-Feb-22 Second semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. Instructions: Draft the appropriatejournal entries for the dates listed above.
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Please answer subparts 2b,3 ASAP. On January 1, 2021, Instaform, Inc., issued 12% bonds with a face amount of $75 million, dated January 1. The bonds mature in 2040 (20 years). The market yield for bonds of similar risk and maturity is 14%. Interest is paid semiannually. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 2-b. Assume the market rate was 11%. Prepare the journal entry to record their issuance by Instaform.3. Assume Broadcourt Electronics purchased the entire issue in a private placement of the bonds. Using the data in requirement 2, prepare the journal entry to record the purchase by Broadcourt.
Q1)Fuzzy Monkey Technologies purchased as a long-term investment $80 million of 8% quoted bonds, dated January 1, on January 1, 2012. 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 $66 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, 2012, was $70 million. Required: 1. Prepare the journal entry to record Fuzzy Monkey's investment on January 1, 2012. 2. Prepare the journal entry by Fuzzy Monkey to record interest on June 30, 2012 (at the effective rate). 3. Prepare the journal entries by Fuzzy Monkey to record interest on December 31, 2012 (at the effective rate).
Solved: A comp... bond price calcu. Price Calculator Financial Calcu Value apter 14, Assignment 2 Submitted 40.65/50 Total points awarde You received no credit for this question in the previous attempt. A company issued 8%, 20-year bonds with a face amount of $110 million. The market yield for bonds of similar risk and maturity is 6%. Interest is paid semiannually. At what price did the bonds sell? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Enter your answers in whole dollars.) 135,426,249 734 pints awarded Price of bonds Scored eBook Print References Next > 3 of 7 ( Prev
Q-3: Dawlance Company issues 12%, 10-year bonds with a par value of Rs. 200,000 and annual interest payments. On the issue date, the annual market rate for these bonds is implies a selling price of 112. The effective interest method is used to allocate interest expense. A. What are the issuer's cash proceeds from issuance of these bonds? B. What total amount of bond interest expense will be recognized over life of these bonds? C. What amount of bond interest expense is recorded on the first interest payment date? D. Prepare the journal entries for the issuance of the bonds. Also calculate market price. 10%, which
Exercise 12-3 (Algo) Securities held-to-maturity [LO12-1] FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&T's investment activities during the last two months of 2021. At November 1, FF&T held $3O million of 25-year, 8% bonds of Convenience, Inc., purchased May 1, 2021, at face value. Management has the positive intent and ability to hold the bonds until maturity. FF&T's fiscal year ends on December 31. 1 Received semiannual interest of $1.2 million from the Convenience, Inc., bonds. 1 Purchased 10% bonds of Facsimile Enterprises at their $24 million face value, to be held until they mature in 2024. Semiannual interest is payable May 31 and November 30. 31 Purchased U.S. Treasury bills to be held until they mature in two months for $9.5 million. 31 Recorded any necessary adjusting entry(s) relating to the investments. Nov. Dec. The fair values of the…
Q2) Fuzzy Monkey Technologies purchased as a long-term investment $80 million of 8% quoted bonds, dated January 1, on January 1, 2012. 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 $66 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, 2012, was $70 million. Required: 1. At what amount will Fuzzy Monkey report its investment in the December 31, 2012, statement of financial position? Why? 2. How would Fuzzy Monkey's 2012 statement of cash flows be affected by this investment?

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