On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $167 m
ID: 2328095 • Letter: O
Question
On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $167 million. The bonds were priced at $146.3 million to yield 14%. Interest is paid semiannually on June 30 and December 31, Baddour's fiscal year ends September 30. Required 1. What amount(s) related to the bonds would Baddour report in its balance sheet at September 30, 2018? 2. What amount(s) related to the bonds would Baddour report in its income statement for the year ended September 30, 2018? 3. What amount(s) related to the bonds would Baddour report in its statement of cash flows for the year ended September 30, 2018? In which section(s) should the amount(s) appear? For all requirements, Enter your answers in whole dollars.) 1.Net bonds payable Interest payable 2. Interest expense for fiscal 2018 3. Sale of bonds Cash interest paidExplanation / Answer
1-
net amount payable
face value of bond
167.0
less discount on issue of bonds payable
(167-146.3)
20.70
bonds payable
146.30
2-
Amount of interest expense
coupon payment = 167*12%*9/12
15.03
amortization of discount payable on bonds payable =market value*effective yield rate - coupon payable
(146.3*14%*9/12)-15.03
0.33
Amount of interest expense
15.36
3-
sale of bonds
146.30
cash interest paid
15.03
amount related to bonds into cash flow statement
161.33
1-
net amount payable
face value of bond
167.0
less discount on issue of bonds payable
(167-146.3)
20.70
bonds payable
146.30
2-
Amount of interest expense
coupon payment = 167*12%*9/12
15.03
amortization of discount payable on bonds payable =market value*effective yield rate - coupon payable
(146.3*14%*9/12)-15.03
0.33
Amount of interest expense
15.36
3-
sale of bonds
146.30
cash interest paid
15.03
amount related to bonds into cash flow statement
161.33