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Which Pay Interest Semi-annually On June 30, And December 31. The Bonds Were Sold For $187,580.41,...

Which Pay Interest Semi-annually On June 30, And December 31. The Bonds Were Sold For $187,580.41, Since The Market Was 12%. In Addition, On July 1, 2019, The Company Issued Ad- Ditional Bonds With A Face Value Of $400,000 That Mature On June 30, 2029 For $427,355.48, ...

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On January 1, 2018, "ABC" Company issued $200,000, 10%, 4 years callable bonds at 105, which pay interest semi-annually on June 30, and December 31. The bonds were sold for $187,580.41, since the market was 12%. In addition, On July 1, 2019, the company issued ad- ditional bonds with a face value of $400,000 that mature on June 30, 2029 for $427,355.48, since the market rate was 8%. The new bonds are non-callable bonds that has a stated rate of 9% payable every 3 months on March 31, June 30, September 30, and December 31. Moreover, on July 1, 2020, "ABC" Company called 30% of its outstanding bonds.
١: What is the amount of interest expense that must be presented on "ABC" Company income statement for the year ended December, 31, 2018?
٢: What is the amount of interest expense that must be presented on "ABC" Company income statement for the year ended December, 31, 2019
٣: What is the amount of interest expense that must be presented on "ABC" Company income statement for the year ended December, 31, 2020?
٤: In the space below, show the presentation on the current and non-current liability on the statement of financial position as on 31/12/2020

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Answer #1

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Calculation of interest of Bonds of ABC Company

1. In the Year 2018

on june 30 _$200000*10%*1/2=$10000

on Dec 30_$200000*10%*1/2=$10000

Total interest Charged on 2018=$20000

2. In the Year 2019

on mar march 31_$400000*9%*3/12=$9000

on june 30_$9000

On sep 30_$9000

on Dec 31_$9000

Total interest Charged on 2019=$36000

3. In the year 2020

on March 31_$9000

On june 30_$9000

Balance of Bonds on july =$200000-$200000*30%

=$140000.

On Sep 30_$140000*9%*3*12=$3150

On DEC 31_$1400000*9%*3/12=$3150

Total interest Charged on 2020=$24300

Non current liablities

9% , 10 yeras non convertable bonds @ 280000

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