Continuation of Question I asked right before this***** D Chapter 14 Pre-Built A

Question

Continuation of Question I asked right before this*****

D Chapter 14 Pre-Built Assignme X C ezto.mheducation.com/hm.tpx pps D Victoria's Secret CareCredit QAlly My Math Lab M BCC Email WebAdvisor M 2(b)For each semiannual period, complete the table below to calculate the straight-line discount 2(c) For each semiannual period, complete the table below to calculate the bond interest expense Bond interest 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds ife. Amount repaid. of l Peried- End Discount Carrying Value

Explanation / Answer

Hillside issues $1,100,000 of 9%, 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 $950,524. Required: 1. Prepare the January 1, 2015, journal entry to record the bonds’ issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment.

Answers:

2 (a) Semi-Annual Cash Payment = $1,100,000 * 9% * (6/12) = $49,500

2 (b) Amount of discount amortization for each semi-annual period Under straight line method = (Total Issue - Issue price)/N = ($1,100,000 - $950,524)/30 = $4,983

Here N is 30, because its a semiannual payment for 15 yrs bond.

2(c) Semi-Annual Bond interest expense = $49,500 - $4,983 = $44,517

3 Total Bond interest Expense to be recognised over bond's life = $44,517 * 30 = $1,335,510

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