Hillside issues $1,400,000 of 5%, 15-year bonds dated January 1, 2017, that pay
ID: 2403135 • Letter: H
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Hillside issues $1,400,000 of 5%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,713,594.
Hillside issues $1.400.000 of 5% 15-year bonds dated January 1. 2017, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,713.594. Required: 1. Prepare the January 1, 2017, journal entry to record the bonds issuance. 2/a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line premium amortization. 2(c) For each semiannual period. complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds'life. 4. Prepare the first two years of an amortization table using the straight-line method 5. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Req 1Req 2A to 2Req 3 Req 4 Req 5 Prepare the January 1, 2017, journal entry to record the bonds' issuance. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $1,400,000 cash on January 1, 2017 at an issue price of $1,713,594. Note: Enter debits before credits Debit Credit Date General Jo Jan 01, 2017Explanation / Answer
Req 1: Journal Entry for issuance: Jan 12017 Cash account Dr. 1713594 Bonds payable 1400000 Premium on bonds payable 313594 Req 2: Cash payment: Par value * Annual Rate * Year = Semi Annual cash interest 1400000 5% 0.5 35000 Straight line Premijm amort: Bond price - Maturity Value = Premium / Semi annual period = Straight line premium amort 1713594 - 1400000 = 313594 / 30 10453 Bond Interest expense: Semi Annual cash interest - Premium Amortized Bond interest payment 35000 - 10453 = 24547 Req 3: Amount repaid: 30 payments of $ 35000 1050000 Par value of maturity 1400000 Total repaid 2450000 Less: Amount borrowed 1713594 Total Interest expense 736406 Rreq 4: Semi annual Unamortized Carrying Period Premium value 01.01.17 313594 1713594 30.06.17 303141 1703141 31.12.17 292688 1692688 30.06.18 282235 1682235 31.12.18 271782 1671782 Rreq 5: Journal entries: Date Accounts title and explanations Debit $ Credit $ 30.06.17 Interest expense Account Dr. 24547 Premium on Bonds payable Dr. 10453 Cash account 35000 31.12.17 Interest expense Account Dr. 24547 Premium on Bonds payable Dr. 10453 Cash account 35000
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