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Grendel Corp. has the following issue of bonds outstanding at 1/1/18: $4,000,000, 7% 10-year bonds issued...

Grendel Corp. has the following issue of bonds outstanding at 1/1/18:

$4,000,000, 7% 10-year bonds issued on 1/1/16 that pay interest annually on 12/31 of each

year. The market rate of interest on 1/1/16 was 9% for comparable issuers. There were no

issue costs, but bonds have a call option of 104 that is exercisable at any time after issue.

The market rate of interest fell to 6.5% on 1/1/18.

Use this information to fill in the tables that follow assuming Grendel Corp. retired 50% of the

bonds on 1/1/18:

Balance Sheet (3 pts each)

12/31/18

12/31/17

Carrying value of 7% bond issue

Income Statement (3 pts each)

2018

Interest Expense

Gain/loss on retirement

Statement of Cash Flows

2018

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

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