Billabong Inc. needed financing to build a new plant.  On June 30th, 2012, Billabong issued $1,000,000 of 10-year bonds with a 10% coupon rate (payments due on December 31st and June 30th). The effective interest rate (i.e. yield) was 8%.

Use the financial statement effects template below to record the bond issue and Billabong’s first interest payments. PLEASE SHOW YOUR CALCULATIONS IN EXCEL. Please use the EXCEL Sheet and make the appropriate adjustments for your present value calculations.

 

Income Statement Balance Sheet Liabil- Earned Net Noncash Cash + Asset Contrib. + Capital Rev- Expen- Transaction Assets enues ses ities Capital Income Bond issue Interest 12/31 Interest 6/30