Hillside issues $1,800,000 of 7%, 15-year bonds dated January 1, 2015, that pay

Question

Hillside issues $1,800,000 of 7%, 15-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,555,401.

For each semiannual period, complete the table below to calculate the cash payment.

For each semiannual period, complete the table below to calculate the straight-line discount amortization.

For each semiannual period, complete the table below to calculate the bond interest expense.

Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

Prepare the first two years of an amortization table using the straight-line method.

Prepare the journal entries to record the first two interest payments.

For each semiannual period, complete the table below to calculate the cash payment.

Explanation / Answer

Face Value 1800000 Issue Price 1555401 Discount On Bond 244599 Cash Payment 1800000*7%/2 63000 Interest expense 63000+16306 793607 Cash Payment 1800000*7%/2 63000 Unamortised discount Carrying Value 01- Jan-2015 244599 1555401 30- Jun-2015 228292.4 1571707.6 31- dec-2015 211985.8 1588014.2 30- Jun-2016 195679.2 1604320.8 31- dec-2016 179372.6 1620627.4

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