Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2015, that pay

Question

Hillside issues $4,000,000 of 6%, 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 $3,456,448.

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

3. 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.

Hillside issues $4,000,000 of 6%, 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 $3,456,448.

Explanation / Answer

For each semiannual period, compute the cash payment. (Omit the "$" sign in your response.)
$47,500 ($1,900,000 x .05 x .50)

2(b)
For each semiannual period, compute the the straight-line discount amortization. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)
8,606 (1,900,000 - 1,641,812) / 15 x .50


2(c)
For each semiannual period, compute the bond interest expense. (Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.)
56,106 (47,500 + 8,606)

3.

Determine the total bond interest expense to be recognized over the bonds' life. (Omit the "$" sign in your response.)
1,683,188 (1,900,000 x .05 x 15) + (1,900,000 - 1,641,812)

5.

Prepare the journal entries to record the first two interest payments. (Round your intermediate
calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

DR Interest Expense 56,106
CR Cash 47,500
CR Discount on Bonds Payable 8,606

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