Question

Hillside issues $2,900,000 of 9%, 15 year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31 The bonds are issued at a price of $3,549,590 Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2a) 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 21c) 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 a straight-line amortization table 5. Prepare the journal entries to record the first two interest payments Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A to 20 Reg 3 Reg 4 Reg 5 Prepare the January 1 journal entry to record the bonds issuance. View transaction list Journal entry worksheet Record the issue of bonds with a par value of $2,900,000 cash on January 1, 2019 at an issue price of $3,549,590. NoteEnter debits before credits General Journal Debit Credit January 01

Answer 1

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Requirement 1
Jan 1	Cash	$     3,549,590
	Premium on Bonds payable		$   2,900,000
	Bond Payable		$       649,590
Requirement 2
2a	$                                                  2,900,000	x	9%	x	6/12	=	$   130,500
2b	$                                                  3,549,590	-	$   2,900,000	=	$   649,590	/	30	=	$   21,653
2c	$                                                      130,500	-	$         21,653	=	$   108,847
Requirement 3
30 Payment of	$                                                      130,500	$     3,915,000
Par value		$     2,900,000
Total Repaid		$     6,815,000
Less: Amount borrowed		$   (3,549,590)
Total bond int expense		$     3,265,410
Requirement 4
1/1/2019	$                                                      649,590	$     3,549,590
6/30/2019	$                                                      627,937	$     3,527,937
12/31/2019	$                                                      606,284	$     3,506,284
6/30/2019	$                                                      584,631	$     3,484,631
12/31/2019	$                                                      562,978	$     3,462,978
Requirement 5
Jun 30	Interest Expense	$         108,847
	Premium on Bond payable	$           21,653
	Cash		$       130,500
Dec 31	Interest Expense	$         108,847
	Premium on Bond payable	$           21,653
	Cash		$       130,500