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?