Hillside issues $1,800,000 of 7%, 15-year bonds dated January 1, 2017, that pay
ID: 2537707 • Letter: H
Question
Hillside issues $1,800,000 of 7%, 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 $2,203,194.
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.
Prepare the January 1, 2017, journal entry to record the bonds’ issuance.
For each semiannual period, complete the table below to calculate the cash payment, straight-line premium amortization and bond interest expense. (Round "Unamortized Premium" to whole dollar and use the rounded value for part 4 & 5.)
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
Record the first interest payment on June 30, 2017.
Note: Enter debits before credits.
Record the second interest payment on December 31, 2017.
No Date General Journal Debit Credit 1 Jan 01, 2017 Cash 2,203,194 Bonds payable 1,800,000 Premium on bonds payable 403,194Explanation / Answer
Calculate the total bond interest expense to be recognized over the bonds' life. Par (maturity) value x Annual rate / Year = Semi annual cash payment Total bond interest expense over life of bonds: $1,800,000.00 x 7% / 0.5 = $63,000.00 Amount repaid $30 Payments of $63,000 $1,890,000 Bond price - Par (maturity) value = Premium on bonds payable / Semi annual periods = Straight line premium amortization Par Value at Maturity $1,800,000 $2,203,194.00 - $1,800,000.00 = $403,194.00 / 30 = $13,439.80 Total Repaid $3,690,000 Less : Amount borrowed $2,203,194 Semi annual Cash payment - Premium amortization = Bond Interest expense Total bond interest expense $1,486,806 $63,000.00 - $13,439.80 = $49,560.20 Prepare the first two years of an amortization table using the straight-line method Semi annual period Unamortized Premium Carrying Value 01/01/2017 $403,194.00 $1,800,000.00 30/06/2017 $389,754.20 $1,800,000.00 31/12/2017 $376,314.40 $1,800,000.00 30/06/2018 $362,874.60 $1,800,000.00 31/12/2018 $349,434.80 $1,800,000.00 Journal entries Date General Journal Debit Credit 30/06/2017 Interest Expense $49,560.20 Premium on bonds payable $13,439.80 Cash $63,000.00 31/12/2017 Interest Expense $49,560.20 Premium on bonds payable $13,439.80 Cash $63,000.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.