How much cash will be received on the sale

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Question - Zeus Corporation has $10,000,000 of 6.0% 25 year bonds dated July 1, 2018 with interest payable on June 30 and December 31. The corporation's fiscal year ends on December 31, and it uses the straight line method to amortize bond premiums and discounts.

Assume the bonds are issued at 102.5 on July 1, 2018. Show your work and computations.

1. How much cash will be received on the sale?

2. How much is recorded as Bond Payable at the time of the sale?

3. What is the difference between #1 and #2 referred to and what is the dollar amount?

4. With regard to the bond interest payment on December 31, 2018:

a. How much cash is paid in interest?

b. How much is the bond amortization per period of the premium or discount?

c. What is the interest expense for the six months ended December 31, 2018?

5. What would be the "carrying value" of the bonds as of June 30, 2019?

Reference no: EM132575862

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