Question

Cyber Tech Inc. produces and distributes fiber optic cable for use by telecommunications companies. Cyber Tech Inc. issued $65,250,000 of 10-year, 7% bonds on March 1 at their face amount, with Interest payable on March 1 and September 1. The fiscal year of the company is the calendar year.

Illustrate the effects on the accounts and financial statements of recording the following selected transactions for the current year. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Round your answers to the nearest dollar.

Mar. 1. Issued the bonds for cash at their face amount.

Assets =

Liabilites =

Stockholder Equity =

Statement of Cash flows =

Income Statement =

Sept. 1. Paid the interest on the bonds.

Assets =

Liabilites =

Stockholder Equity =

Statement of Cash flows =

Income Statement =

Dec. 31. Recorded accrued interest for four months.

Assets =

Liabilites =

Stockholder Equity =

Statement of Cash flows =

Income Statement =

Answer 1

Mar. 1. Issued the bonds for cash at their face amount.

	Account	Amount
Assets	Cash	$65250000
Liabilities	Liabilities	$65250000
Stockholder Equity	No effect
Statement of Cash flows	Cash flow from financing activities	$65250000
Income Statement	No effect

Sept. 1. Paid the interest on the bonds.

	Account	Amount
Assets (65250000*7%*6/12)	Cash	-$2283750
Liabilities	No effect
Stockholder Equity	Retained earnings	-$2283750
Statement of Cash flows	Cash flow from operating activities	-$2283750
Income Statement	Expense	$2283750

Dec. 31. Recorded accrued interest for four months.

	Account	Amount
Assets	No effect
Liabilities (65250000*7%*4/12)	Interest payable	$1522500
Stockholder Equity	Retained earnings	-$1522500
Statement of Cash flows	No effect
Income Statement	Interest expense	$1522500