Most Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $640 million on January 1, 2016. The bonds mature in 2026 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest expense is recorded at the effective interest rate. Interest is paid semiannually on June 30 and December 31. Most recorded the sale as follows: January 1, 2016 Cash (price) ............................................................................................. 566,589,440 Discount on bonds (difference) ............................................................... 73,410,560 Bonds payable (face amount) .............................................................. 640,000,000 Required: What would be the amount(s) related to the bonds that Most would report in its statement of cash flows for the year ended December 31, 2016?
Most Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $640 million on January 1, 2016.
The bonds mature in 2026 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest
expense is recorded at the effective interest rate. Interest is paid semiannually on June 30 and December 31. Most
recorded the sale as follows: January 1, 2016
Cash (price) ............................................................................................. 566,589,440
Discount on bonds (difference) ............................................................... 73,410,560
Bonds payable (face amount) .............................................................. 640,000,000 Required:
What would be the amount(s) related to the bonds that Most would report in its statement of
year ended December 31, 2016?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 7 images
