Problem 14-2 Effective interest; financial statement effects [L014-2] 2 On Janua

Question

Problem 14-2 Effective interest; financial statement effects [L014-2] 2 On January 1, 2018, Baddour, Inc., issued 12% bonds with a face amount of $172 million. The bonds were priced at $150.8 million to yield 14%. Interest is paid semiannually on June 30 and December 31, Baddour's fiscal year ends September 30. 016/0 28 Required points awarded 1. What amount(s) related to the bonds would Baddour report in its balance sheet at September 30. 2018? Sed3. What amounts) 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 161,474,000 5,160,000 5.278,000 Interest payable 2 Ir 2 Interest expense for fiscal 3. Sale of bonds $150,800,000Inflow from financing acivities 15,480,00 Outlow from operating activitles Cash Interest paid O Type here to search 18

Explanation / Answer

AMORTIZATION TABLE: DATE CASH INTEREST DISCOUNT UNAMORTIZED CARRYING INTEREST EXPENSE AMORTIZED DISCOUNT VALUE OF BONDS 01.01.18 21,200,000 150,800,000 30.06.18 10,320,000 10,556,000 236,000 20,964,000 151,036,000 31.12.18 10,320,000 10,572,520 252,520 20,711,480 151,288,520 Req 1: Bonds payable on Sep30 Bonds payable Ggross 172,000,000 Less: Unamortized Discount 20,837,740 (21200,000-236,000-(252520)/2) Bonds Payable Net 151,162,260 Interest payable (10320,000*3/6) 5,160,000 Req 2: Interest expense in Income Statement Interest expense for 30.06.2018 10,556,000 Interest expense till 30.09.2018 5,286,260 (10572,520*3/6) Total Interest expense 15,842,260 Req 3: Sale of Bonds : $ 150800,000 (Inflow in Financing Activities) Interest paid: $ 10320,000 (Outflow in Operating Activities)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---