Hillside issues $1,500,000 of 6%, 15-year bonds dated January 1, 2016, that pay

Question

Hillside issues $1,500,000 of 6%, 15-year bonds dated January 1, 2016, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,835,994.

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

I want explanations on how to get the unamortized discound

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

Record the first interest payment on June 30, 2016.

Record the second interest payment on December 31, 2016.

Semiannual Period-End Unamortized Discount Carrying Value 01/01/2013 06/30/2013 12/31/2013 06/30/2014 12/31/2014

Explanation / Answer

Premium on Issue of Bonds = Proceeds of Bonds - face Value =$1835994-$1500000 =$335,994 Amortised Premium for 6 Months =$335,994/Number of Periods in Duration of Bond =$335994/(15*2) =$11,199.80 Interest expense for 6 Months =$1500,000*6%*50% =$45000 Prepare the first two years of an amortization table using the straight-line method Semi annual period End Amortised premium Unamortised Premium Balance credit in Bonds payable Acount carrying Value 01/01/2013 335994 1500000 1835994 06/30/2013 11199.8 324794.2 1500000 1824794.2 12/31/2013 11199.8 313594.4 1500000 1813594.4 06/30/2014 11199.8 302394.6 1500000 1802394.6 12/31/2014 11199.8 291194.8 1500000 1791194.8 Prepare the journal entries to record the first two interest payments. Date General journal Debit Credit Jun-30 Interest Expense A/c 45000 Premium on Bonds payable A/c 11199.8 56199.8             To Cash A/c (Being Journal recorded for Interest payments for 6 Months) Dec-31 Interest Expense A/c 45000 Premium on Bonds payable A/c 11199.8 56199.8             To Cash A/c (Being Journal recorded for Interest payments for 6 Months)

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