Diaz Company issued bonds with a $180,000 face value on January 1, Year 1. The...
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Diaz Company issued bonds with a $180,000 face value on January 1, Year 1. The bonds had a 7% stated rate of interest and a 5-year term. Interest is paid in cash annual beginning December 31, Year 1. The bonds were issued at 98. The straight-line method is used for amortization.
How much cash does Diaz Company receive on the date the bonds are issued?
At maturity, Diaz Company will pay $192,600. $180,000 is the face value of the bond while $12,600 is interest for the final year. How much of this payment will be recorded as financing activities on the Statement of Cash Flows?
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