Question

Hillside issues $2,600,000 of 5%, 15-year bonds dated January 1, 2018, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,246,690. Required: 1. Prepare the January 1, 2018, 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 discount 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. Complete this question by entering your answers in the tabs below. Req1 Req 2A to 20 Req3 Req 4 Reg 5 For each semiannual period, complete the table below to calculate the cash payment, straight-line discount amortization and bond interest expense. Par (maturity) value Annual Rate Year Semiannual cash interest payment 5% Par (maturity) value Bonds price Discount on Bonds Payable Semiannual periods Straight-line discount amortization Semiannual cash payment Discount amortization Bond interest expense < Req1 Req3 >

Could whoever does the problem please explain it as well or at least show the work you did to complete the problem please. I would really appreciate it. Thank you.

Answer 1

Journal entry
Date	General Journal				Debit	Credit
1/1/2018	Cash				2,246,690
	discount on bonds				353,310
	bonds payable					2,600,000
2-a)	par maturity value			Annual rate	/	year	semi annual cash payment
	2,600,000		*	5%		6./12	65000
							semi annual		Straight line
2-b)	par value		bonds price		Discount		periods		disc amortization
	2,600,000	-	2,246,690	=	353,310	/	30	=	11777
2-c)	Semi annual cash			Discount		bond interest expense
	payment			amortization
	65,000		+	11777	=	76,777
3)	total bond interest expense over life of bonds
	amount repaid
	30	payments of		65,000	1950000
		par value ant maturity			2,600,000
	total repaid				4550000
	less amount borrowed				2,246,690
	total bond interest expense.				2,303,310
	(note bond interest expense may differ slightly due to rounding)
4)		unamort	Carrying
	period	discount	value
	1/1/2018	353,310	2,246,690
	6/30/2018	341,533	2,258,467
	12/31/2018	329,756	2,270,244
	6/30/2019	317,979	2,282,021
	12/31/2019	306,202	2,293,798
5)
Date	General Journal				Debit	Credit
6/30/2018	interest expense				76,777
	Discount on bonds payable					11,777
	cash					65,000
31/12/2018
	interest expense				76,777
	discount on bonds payable					11,777
	cash					65,000