P9-75A. (Learning Objectives 2, 5: Analyzing a company’s long-term debt; reporting longterm debt on the Balance Sheet [effective-interest method]) The notes to the Helping Charities’

financial statements reported the following data on December 31, Year 1 (end of the fiscal year):

Helping Charities amortizes bonds by the effective-interest method and pays all interest amounts at December 31.
Requirements 1. Answer the following questions about Helping Charities’ long-term liabilities:

a. What is the maturity value of the 7% bonds?

b. What are Helping Charities’ annual cash interest payments on the 7% bonds?

c. What is the carrying amount of the 7% bonds at December 31, year 1?
2. Prepare an amortization table through December 31, Year 4, for the 7% bonds. The market interest rate on the bonds was 8%. (Round all amounts to the nearest dollar.) How much is Helping Charities’ interest expense on the 7% bonds for the year ended December 31, Year 4?
3. Show how Helping Charities would report the 7% bonds payable and the 6% notes payable at December 31, Year 4.

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Note 6. Indebtedness Bonds payable, 7% due in Year 7 Less: Discount. Notes payable, 6%, payable in amounts of $55,000 annual installments starting in Year 5... $3,500,000 (162,365) $3,337,635 330,000