Reference no: EM133046571
Question - You have the following information for Brophy, Inc. December 31 Long-Term Debt ($ in millions)Year 2 Year 1 7% debentures, $300 million face value, due Year 11, effective rate $14.6%$188.6 $182.7 Zero coupon bonds, $500 million face value, due Year 8, effective rate 12.0% 267.9 239.2 Mortgage debt, $850 million face value, due Year 5, effective rate 8.7%, secured by corporate headquarters 834.5 833.9 Various other long-term debt 12,444.2 16,329.2 Total long-term debt $13,735.2 $17,585.0
Assume the interest for all the bonds are based on annual basis.
Required -
1. How much interest expense did the company record during Year 2 on the 7% debentures? How much of the original issue discount was amortized during Year 2?
2. How much interest expense did the company record during Year 2 on the zero coupon bonds?
3. Suppose that interest payments on the mortgage are made on December 31 of each year. What journal entry did the company make in Year 2 to recognize interest expense on this debt?
4. How much cash interest did the company pay out during Year 2 on the 7% debentures and the zero coupon bonds?
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