On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $179 m

Question

On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $179 million. The bonds were priced at $157.1 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.) $143,020,815 $ 4,890,000 $ 14,990,815 $142,700,000Inflow from financing activities $ 9,780,000Outflow from operating activities 1. Net bonds payable Interest payable Interest expense for fiscal 2 2018 3.Sale of bonds Cash interest paid

Explanation / Answer

1.Net Bond Payable = 157357000 refer table below

Interest Payable = 179 m * 12% * 3/12 = 5370000

2. Interest exp for fiscal year = Interest of 1st installment + balance 3 month interest

= 10997000 + 157357000*14%*3/12

= 10997000 + 5507495

= 16504495

3 Issuance of 12% Bond = 157.1 million

Cash Interest Paid = 179 million*12%*6/12 = 10740000

Period Cash Payment Interest Net increase Carrying value 01/01/2018 157100000 30/06/2018 10740000 10997000.00 257000.00 157357000.00 31/10/2019 10740000 11014990.00 274990.00 157631990.00

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