Question
On January 1 2020, Oriental Fragrances Company issues $1,000,000 face value, 8-year bonds with annual interest payment of $62,500 to be paid each December 31.
On January 1 2020, Oriental Fragrances Company issues $1,000,000 face value, 8-year bonds with annual interest payment of $62,500 to be paid each December 31. The market interest rate is 6.5 percent. Using the effective interest rate method of amortization, Oriental Fragrances is likely to record:
(Wrong choices are penalized.)
Select one or more:
a. A $64,011 cash outflow from operating activity on the 2020 statement of cash flows.
b. None of other choices.
c. A $64,011 cash inflow from investing activity on the 2020 statement of cash flows.
d. A liability of $986,289 on December 31 2020 balance sheet.
e. An interest expense of $62,500 on its 2020 income statement.
f. An interest expense of $64,011 on its 2020 income statement.
g. A liability of $984,778 on December 31 2020 balance sheet.
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