ABC Company issues bonds on January 1, Year 1. The bonds have apar value of $10,000,000, a coupon rate of 10% with interest paidsemi-annually on every June 30 and December 31 for 10 years, andthe yield on the date of issuance is 8%. Calculate thefollowing:
a. The issuance price on January 1, Year1.
b. The impact on the income statement in Year 1. (Expense orrevenue and the amount.)
c. The impact on the statement of cash flows in Year 1. (Sectionof the statement of cash flows, amount, inflow or outlfow.)
d. The amount of total interest expense over the life of thebonds (hint: you can calculate this without generating anamortization chart.)
e. The carrying value of the bonds on the balance sheet atDecember 31, Year 1.
