Problem $12-3($Algo$)$ Securities available$-$for$-$sale; bond investment; effective interest; financial statement effects $[$LO$12-1,12-4]$

Fuzzy Monkey Technologies, Incorporated purchased as a long$-$term investment $$140$ million of $10\%$ bonds, dated January $1,$ on January $1,2024.$ Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was $12\%.$ The price paid for the bonds was $$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 $31,2024,$ was $$130$ 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 $31,2024,$ 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 this investment? $($If more than one approach is possible, indicate the one that is most likely.$)$

Problem $12-3($Algo$)$ Securities available$-$for$-$sale; bond investment; effective interest; financial

statement effects $[$L$012-1,12-4]$

Fuzzy Monkey Technologies, Incorporated purchased as a long$-$term investment $$140$ million of $10\%$ bonds, dated January $1,$ on

January $1,2024.$ Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk

and maturity the market yield was $12\%.$ 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 $31,2024,$ was $$130$ million.

Required:

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 $31,2024,$ balance sheet?

$4-$b$.$ Prepare the entry necessary to achieve this reporting objective.

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.$)$

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Req $1$ to $3$

Prepare the relevant journal entries on the respective dates $($record the interest at the effective rate$).$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round

intermediate calculations. Enter your answers in millions rounded to $2$ decimal places, $($i$.$e$.,5,500,000$ should be entered as

$5\mathrm{.}50).$