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PLEASE HELP ME WITH THESE QUESTIONS BELOW During Year 1 and Year 2, Agatha Corporation completed the following transactions relating to its bond issue. The
PLEASE HELP ME WITH THESE QUESTIONS BELOW
During Year 1 and Year 2, Agatha Corporation completed the following transactions relating to its bond issue. The corporation's fiscal year is the calendar year. Year 1 January 1 Issued $390,000 of 10 -year, 6 percent bonds for $378,000. The annual cash payment for interest is due on December 31 . December 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest. December 31 closed the interest expense account. Year 2 December 31 Recognized interest expense, including the straight-line amortization of the discount, and made the cash payment for interest. December31 Closed the interest expense account. Required a-1. When the bonds were issued, was the market rate of interest more or less than the stated rate of interest? a-2. If Agatha had sold the bonds at their face amount, what amount of cash would Agatha have received? b. Prepare the liabilities section of the balance sheet at December 31, Year 1 and Year 2. c. Determine the amount of interest expense that will be reported on the income statements for Year 1 and Year 2. d. Determine the amount of interest that will be paid in cash to the bondholders in Year 1 and Year 2Step by Step Solution
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