Question

Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $4,895,980.

1.	Prepare the January 1, 2013, journal entry to record the bonds’ issuance.
	No Date General Journal Debit Credit 1 Jan. 1, 2013

2.(b)	For each semiannual period, complete the table below to calculate the straight-line premium amortization. Bond price Par (maturity value) Premium on Bonds Payable Semiannual periods Straight-line premium amortization - = ÷ 30 =
	2.(c) For each semiannual period, complete the table below to calculate the bond interest expense. Semiannual cash payment Premium amortization Bond interest expense $120,000 =

3.	Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
	Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity Total repaid 0 Less amount borrowed Total bond interest expense $0

4.	Prepare the first two years of an amortization table using the straight-line method.
	Semiannual Period-End Unamortized Premium Carrying Value 01/01/2013 06/30/2013 12/31/2013 06/30/2014 12/31/2014 5. Prepare the journal entries to record the first two interest payments. Journal entry worksheet Record the first interest payment on June 30, 2013. Date General Journal Debit Credit Jun 30, 2013 Dec. 31, 2013

     

Answer 1