Question

1.Xonic Corporation issued $8 million of 10-year, 12 percent bonds on April 1, 2018, at 112.5 to yield 10 percent. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2028. Xonic’s fiscal year ends on March 31. What is the interest expense for the year ended March 31, 2019? Please round your answer to the nearest dollar.

2.Xonic Corporation issued $8 million of 10-year, 12 percent bonds on April 1, 2018, at 112.5 to yield 10 percent. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2028. Xonic’s fiscal year ends on March 31. What is net book value reported on the balance sheet on March 31, 2019? Please round your answer to the nearest dollar.

3.Mellilo Corporation issued $5 million of 10-year, 8.5 percent bonds on January 1, 2018 at 90.5 to yield 10 percent. Interest is due on June 30 and December 31 each year, and all of the bonds in the issue mature on December 31, 2028. Mellilo's fiscal year ends on December 31. What is the amount of interest expense reported in 2018? Please round your answer to the nearest dollar.

4.Mellilo Corporation issued $5 million of 10-year, 8.5 percent bonds on January 1, 2018 at 90.5 to yield 10 percent. Interest is due on June 30 and December 31 each year, and all of the bonds in the issue mature on December 31, 2028. Mellilo's fiscal year ends on December 31. What is the amount reported on the balance sheet on December 31, 2018? Please round your answer to the nearest dollar.

Answer 1

1) Premium on issue	$ 1,000,000
	(12.5*80,000)
No of interest payments	20
Straight line amortisation of premium	$ 50,000
Interest	12%
Interest Expense on Sep 30,2018
Interest Payment	$ 480,000
less: Premium Amortisation	(50,000)
	$ 430,000
Interest Expense on Mar 31,2019
Interest Payment	$ 480,000
less:Premium Amortisation	(50,000)
	$ 430,000
Total Interest Expense for year Ended Mar 31,2019	$ 860,000
2) Net Book Value of Bond recorded as on 31st March,2019
Bonds Payable 12% due in 10 Years	$        8,000,000
Plus: Premium on Bonds Payable (1000,000-100,000)	900,000
	$        8,900,000

3) Discount on issue	$ 475,000
	(9.5*50,000)
No of interest payments	20
Straight line amortisation of discount	$ 23,750
Interest	8.5%
Interest Expense on June 30,2018
Interest Payment	$ 212,500
Discount Amortisation	23,750
	$ 236,250
Interest Expense on Dec 31,2018
Interest Payment	$ 212,500
Discount Amortisation	23,750
	$ 236,250
Total Interest Expense for year Ended Dec 31,2018	$ 472,500
4) Net Book Value of Bond recorded as on December 31,2018
Bonds Payable 8.5% due in 10 Years	$        5,000,000
less: Discount on Bonds Payable (475000-47500)	(427,500)
	$        4,572,500