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On January 1, 2016, Baddour, Inc., issued 12% bonds with a face amount of $163 million. The bonds were priced at $142.7 million to yield 14%. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. 1. What amount(s) related to the bonds would Baddour report in its balance sheet at September 30, 2016? (Enter your answers in whole dollars.) What amount(s) related to the bonds would Baddour report in its income statement for the year ended September 30, 2016? (Enter your answer in whole dollars.) What amount(s) related to the bonds would Baddour report in its statement of cash flows for the year ended September 30, 2016? In which section(s) should the amount(s) appear? (Enter your answers in whole dollars.)
Expert Answer
| 1 | ||
| Net bonds payable | 143020815 | |
| Interest payable | 4890000 | |
| 2 | ||
| Interest expense for fiscal 2016 | 14990815 | |
| 3 | ||
| Sale of bonds | 142700000 | Inflow from financing activities |
| Cash interest paid | 9780000 | Outflow from operating activities |
| Calculations: | ||
| Bonds payable (face amount) | 163000000 | |
| Less: discount | 20300000 | |
| Initial balance, January 1, 2016 | 142700000 | |
| June 30, 2016, discount amortization. | 209000 | |
| Sept. 30, 2016, discount amortization. | 111815 | |
| Sept. 30, 2016, net bonds payable. | 143020815 | |
| 2 | ||
| June 30, 2016, interest expense. | 9989000 | |
| September 30, 2016, interest expense. | 5001815 | |
| Interest expense for fiscal 2016 | 14990815 |
