Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $

Question

Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $900 million on July 1, 2016, at a price of $890 million. For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31 a. Prepare the journal entry to record interest at the effective interest rate at December 31. (lf no entry is required for a transaction event, select "No journal entry required" in the first account fiel Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as Answer is complete and correct. No Date General journal Debit Credit December 31 Interest expense 44.5 Discount on bonds payable Cash 40.5 b. What would be the amount(s) related to the bonds that Agee would report in its statement of cash flows for the year ended December 31, 2016, if it uses the direct method? (List any cash outflows with a minus sign. Enter your answer in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Answer is complete but not entirely correct. (S in millions Cash outflow from operating activities Cash inflow from operating activities Cash infiow from financing activities 40.5 0.0 890.0

Explanation / Answer

b) Presentation in statement of cash flow :

Cash outflow from operating activities -40.50 Cash inflow from financing activities 890.0

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