On January 1, Year 1, a company issues $200,000 of 8%, 5-year bond, dated 1/1/20X1, which...

On January 1, Year 1, a company issues $200,000 of 8%, 5-year bond, dated 1/1/20X1, which matures 1/1/20X6, and must pay interest twice a year (semi-annually) every first of July and first of January. The Cash balance at the end of July 1, 20X3 is:

Expert Solution

Cash balance at the end of July 1, 20X3 is:

$ 1,60,000.00

Working:

Cash Received on issue of bonds on 1/1/20X1	$ 2,00,000.00
Less: Interest paid on 1/7/20X1 (2000008%6/12)	$ 8,000.00
Less: Interest paid on 1/1/20X2 and 1/7/20X2 (200000*8%)	$ 16,000.00
Less: Interest paid on 1/1/20X3 and 1/7/20X3 (200000*8%)	$ 16,000.00
Cash Balance at the end of 1/7/20X3	$ 1,60,000.00

Since no other information is given it is assumed that only these are cash transactions.

ekkarill92 answered 2 years ago

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