value: 0.83 points Hillside issues $1,200,000 of 8%, 15-year bonds dated January
ID: 2474852 • Letter: V
Question
value: 0.83 points Hillside issues $1,200,000 of 8%, 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 $1,468,794. Required: 1. Prepare the January 1, 2015, journal entry to record the bonds' issuance. view transaction list view general journal Journal Entry Worksheet Record the issue of bonds with a par value of $1,200,000 cash on January 1, 2015 at an issue price of $1,468,794. Date Jan 01, 2015 General Journal Debit Credit *Enter debits before creditsExplanation / Answer
Journal entry to record issuance
Jan 1 ,2005
Cash
1,468,794
To Premium on bonds payable
268,794
To Cash
1,200,000
2A)
Par value
Annual rate
Year
Semi annual cash interest payment
1,200,000
8%
1/2
48,000
2b)
Bond price
Par value
Premium on bonds payable
Semi – annual periods
Straight line premium amortization
1,468,794
1,200,000
268,794
30
8,960
2c) Bond interest expense
Semiannual cash payment
Premium amortization
Bond interest expense
48,000
8,960
39,040
3)
Amount repaid
30 payments of 48,000
1,440,000
Par value maturity
1,200,000
Total repaid
2,640,000
Less: Amount borrowed
(1,468,794)
Total bond interest expense
1,171,206
4)
Semi annual period end
Unamortized premium
Carrying value
1/1/2015
268,794
1,468,794
06/30/2015
259,834
1,459,834
12/31/2015
250,874
1,450,874
6/30/2016
241,914
1,441,914
12/31/2016
232,954
1,432,954
5)Journal entry
6/30/2015
Interest expense
39,040
Premium on bonds payable
8,960
To Cash
48,000
31/12/2015
Interest expense
39,040
Premium on bonds payable
8,960
To Cash
48,000
Jan 1 ,2005
Cash
1,468,794
To Premium on bonds payable
268,794
To Cash
1,200,000
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