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How will figaro report the bond on their 2021 balance sheet

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Reference no: EM132488743

Figaro Company had the following information regarding a five year bond that is issued on Jan. 1, 2019.

Date             Cash Paid        Interest expense 4%              Amount Amortized             Carrying value

1/1/19            -                     -                                     -                                       $643,249

7/1/19        $21,000             $25,729.96                        $4,729.96                           $647,978.86

1/1/20        $21,000             $25,919.15                        $4,919.15                           $652,898.01

7/1/20        $21,000               $26,115.92                        $5,115.92                         $658,013.93

1/1/21        21,000                 $26,320.56                      $5,320.56                           $663,334.49

7/1/21        $21,000                 $26,533.38                       $5,533.38                        $668,867.87

1/1/22          $21,000               $26,754.71                       $5,754.71                       $674,622.58

7/1/22          $21,000                $26,984.90                           $5,984.90                  $680,607.49

1/1/23          $21,000                   $27,224.30                     $6,224.30                      $686,831.78

7/1/23           $21,000                     $27,473.27                    $6,473.27                     $693,305.06

1/1/24           $21,000                        $27,732.20                   $6,732.20                    $700,037.26

Question 1: What is the coupon (face) rate of the bond?

Question 2: What is the effective interest rate of the bond?

Question 3: Was the bond issued at a premium, discount or par?

Question 4: How much total interest expense will Figaro report on this bond in the year 2021?

Question 5: On what financial statement would Figaro report the interest expense?

Question 6: How will Figaro report the bond on their 2021 Balance Sheet?

Question 7: What is the maturity value of the bond?

Question 8: Assume that, on January 1, 2022, Figaro pays $686,000 to retire the bond. What is the gain or loss on redemption? Be sure to show your calculations and specify whether there was a gain or a loss.

Reference no: EM132488743

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