Question
2. On March 1, 2019, Company B issued $1,000,000, 10 years, 12% bonds at 103 excluding accrued interest. The bonds are dated January 1, 2019
2.
On March 1, 2019, Company B issued $1,000,000, 10 years, 12% bonds at 103 excluding accrued interest. The bonds are dated January 1, 2019 and will mature on January 1, 2029. The interest is payable semi-annually on January 1 and July 1 of each year. Company B paid transaction costs amounting to $50,000. How much would be the net cash receipts of Company B as a result of the bond issuance?
A) $1,000,000
B) $1,030,000
C) $980,000
D) $1,050,000
3.
Company H acquired an equipment on June 1, 2020 amounting to $35,000 with an estimated useful life of 5 years. What would be the reported carrying value of the equipment on December 31, 2021 if the residual value at the end of 5 years is $5,000?
A) $25,500
B) $32,000
C) $29,000
D) $26,000
Show your workings please.
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