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 it. 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 on December 31, 2021, was $190 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, 2021, balance sheet? 4-b. Prepare the entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey's 2021 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the one that is most likely.).

1. 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 it. 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 on December 31, 2021, was $190 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, 2021, balance
sheet?
4-b. Prepare the entry necessary to achieve this reporting objective.
5. How would Fuzzy Monkey's 2021 statement of cash flows be affected by this investment? (If
more than one approach is possible, indicate the one that is most likely.)