1) Red Corp issues $1,000,000, 8% five year bonds with interest paid semiannually. The current market rate of interest is 10%.
• Required:
Compute the price of the bond
Compute the discount/premium
Record the issuance of the bonds
Record the first interest payment including straight line amortization.
After 2 years, the company redeems the bonds at $1,040,000. Record the transaction.
2) ABC Corporation uses the indirect method to prepare its statement of cash flows. Data related to cash activities for last year is as follows:
Net income..........................................................................$92,500
Dividends paid (cash) ............................................................$50,100
Depreciation expense..............................................................$14,000
Net decrease in current assets....................................................$21,700
Issued new notes payable for cash..............................................$41,700
Paid cash for building...........................................................$271,000
Net decrease in current liabilities................................................$5,700
Sold investment for cash......................................................$400,000
1) What was the net cash flow from operating activities for the year?
2) What was the cash flow from (or used for) investing activities for the year?
3) What was the cash flow from (or used for) financing activities for the year?
4) What was the net change in cash for the year?
5) If the beginning balance of cash for the year was $158,000, what was the balance of cash at the end of the year?