On January 1, Year 1, Files Co. issued $400,000 of five-year, 6 percent bonds at 97. Interest
Question:
On January 1, Year 1, Files Co. issued $400,000 of five-year, 6 percent bonds at 97. Interest is payable annually on December 31. The discount is amortized using the straight-line method.
Required
a. Determine the amount of cash proceeds received by Files Co. on January 1, Year 1.
b. Calculate the amount of interest expense reported on the December 31, Year 2, income statement.
c. What is the carrying value of the bond liability as of December 31, Year 2?
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a Cash Received 388000 400000 x 97 b Cash paid for interest 24000 400000 x ...View the full answer
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Related Book For 
Introductory Financial Accounting For Business
ISBN: 9781260575309
2nd Edition
Authors: Thomas Edmonds, Christopher Edmonds, Mark Edmonds, Jennifer Edmonds, Philip Olds
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