The note about debt included in the financial statements of Healdsburg Company for the year ended...

Question:

The note about debt included in the financial statements of Healdsburg Company for the year ended December 31, 2017 disclosed the following:

7.85% notes due 2018 $212,400,000
8.35% notes due 2023 $356,200,000
8.60% notes due 2032 $237,000,000
8.23% notes due 2040 $212,000,000
7.15% notes due 2019 $ 26,200,000

The above table summarizes the long-term debt of the Company at December 31. 2017. All of the notes were originally issued at their face (maturity) value and have been gradually repaid over time so that these amounts are the remaining balances at this date.

Assuming that the notes pay interest annually and mature on December 31 of the respective years.

Required:

Compute the total cash interest payments in 2018 for these notes.

Interest

Interest are additional income or payment related to the use of money of others. Common assets that bears interest are cash, loan receivable and notes receivable.

Answer and Explanation:

Total cash interest payments in 2018 for the notes is computed as follows:

Face Value X Annual Interest Rate Total
$212,400,000 7.85% $16,673,400
356,200,000 8.35% 29,742,700
237,000,000 8.60% 20,382,000
212,000,000 8.23% 17,447,600
26,200,000 7.15% 1,873,300
Total interest payments for 2018 $86,119,000

Learn more about this topic:

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How to Calculate Interest Expense: Formula & Example

from Financial Accounting: Help and Review

Chapter 5 / Lesson 18
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