In: Accounting
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:
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 (200000*8%*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.