Bonds; statement of cash flow effects
Response to the following problem:
Most Solutions, Inc., issued 10% bonds, dated January 1, with a face amount of $640 million on January 1, 2016. The bonds mature in 2026 (10 years). For bonds of similar risk and maturity the market yield is 12%. Interest expense is recorded at the effective interest rate. Interest is paid semiannually on June 30 and December 31. Most recorded the sale as follows:
January 1, 2016
Cash (price)............................................ 566,589,440
Discount on bonds (difference) ................. 73,410,560
Bonds payable (face amount).........................................640,000,000
Required:
What would be the amount(s) related to the bonds that Most would report in its statement of cash flows for the year ended December 31, 2016?