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You have the following information for Brophy, Inc. December 31 Long-Term Debt ($ in millions) Year 2 Year 1 7% debentures, $300 million face value,

You have the following information for Brophy, Inc.

December 31
Long-Term Debt ($ in millions)Year 2Year 1
7% debentures, $300 million face value, due Year 11, effective rate $14.6%$188.6$182.7
Zero coupon bonds, $500 million face value, due Year 8, effective rate 12.0%267.9239.2
Mortgage debt, $850 million face value, due Year 5, effective rate 8.7%, secured by corporate headquarters834.5833.9
Various other long-term debt12,444.216,329.2
Total long-term debt$13,735.2$17,585.0

Assume the interest for all the bonds are based on annual basis.

Required:

  1. 1. How much interest expense did the company record during Year 2 on the 7% debentures? How much of the original issue discount was amortized during Year 2?
  2. 2. How much interest expense did the company record during Year 2 on the zero coupon bonds?
  3. 3. Suppose that interest payments on the mortgage are made on December 31 of each year. What journal entry did the company make in Year 2 to recognize interest expense on this debt?
  4. 4. How much cash interest did the company pay out during Year 2 on the 7% debentures and the zero coupon bonds?

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