Chapter 21 Homework 6 5 Agee Technology, Inc. issued 9% bonds, dated January 1,

Question

Chapter 21 Homework 6 5 Agee Technology, Inc. issued 9% bonds, dated January 1, with a face amount of $920 milion on July 1, 2018, at a price of $870 million. For bonds of similar risk and maturity, the market yeld is 10% Interest s pod semiannually on June 30 and December 31 Prepare the journal entry to record interest at the effective interest rate at December 31 What would be the amountís) related to the bonds that Agee would report in its statement of cash flows for uses the direct method? the year ended December 31, 2018, if int 2 85 points Complete this question by entering your answers in the tabs below. General Cash Paid Journal What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2018, if it uses the direct method? (List any cash outflows with a minus sign. Enter your answers in milions s) relateract methodbe entered a rounded to 1 decimal place (.05,500,000 should be entered as 5.5).) Relerences General Journal

Explanation / Answer

Date Account Titles and Explaination Debit ($' millions) Credit ($' millions) Dec-31 Interest Expense ($870 million X 5%) 43.5 Discount on bond payable 2.1 Cash account [($920 million X 9%) X 6/12] 41.4 (Being interest expense on bonds recorded) ($' millions) Cash inflow from Financing Activities 870 Cash outflow from Operating Activities 41.4 (Discount on bonds is a non - cash item and shall not be reported under direct method)

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