(Learning Objectives 2, 5: Analyzing a company’s long-term debt; reporting the long-term debt on the balance sheet (effective-interest method)) The notes to the Helpful Charities fi nancial statements reported the following data on December 31, Year 1 (end of the fi scal year):

Helpful Charities amortizes bonds by the effective-interest method and pays all interest amounts at December 31.

❙ Requirements 1. Answer the following questions about Helpful Charities’ long-term liabilities:

a. What is the maturity value of the 4% bonds?

b. What is Helpful Charities’ annual cash interest payment on the 4% bonds?

c. What is the carrying amount of the 4% bonds at December 31, Year 1?

2. Prepare an amortization table through December 31, Year 4, for the 4% bonds. The market interest rate on the bonds was 5%. Round all amounts to the nearest dollar.

How much is Helpful Charities’ interest expense on the 4% bonds for the year ended December 31, Year 4?

3. Show how Helpful Charities would report the 4% bonds and the 7% notes payable at December 31, Year 4.