Question

Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $2,000 million on July 1, 2018, at a price of $1,980 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid 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 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? Complete this question by entering your answers in the tabs below. General Journal Cash Paid Prepare the journal entry to record interest at the effective interest rate at December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) View transaction list Journal entry worksheet 1 Record interest payment at December 31, 2018 Note: Enter debits before credits. General journal Date Debit Credit December 31 Record entry Clear entry View general journal

Answer 1

Interest x pense 99million 1980 bond holders) Cash cpaid to 97. x 112 x 2000 = 90million Interest Expense 99 million Discount on bond payabie cash 9om cash inflow from finan Cing achvities 1980 million cash outflow from operaing 2 90 million) ach'vities 3e lling bonds is a finoncing achvity Cash interest operating item