Question

I need help with 2b,2c,3,4,5

Hillside issues $2,400,000 of 9%, 15-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31, The bonds are issued at a price of $2,073,868. Required: 1. Prepare the January 1,2017, 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. S. Prepare the journal entries to record the first two interest payments

Answer 1

Solution 1:

Journal Entries - Hillside
Date	Particulars	Debit	Credit
1-Jan-18	Cash A/c Dr	$2,073,868.00
	Discount on issue of bond Dr	$326,132.00
	To Bonds payable		$2,400,000.00
	(To record issue of bond at discount)

solution 2a:

Computation of Semiannual cash interest payment
Par (maturity Value)	Annual Rate	Semiannual period	Semiannual cash interest payment
$2,400,000.00	9%	2	$108,000.00

Solution 2b:

Computation of Semiannual discount amortization
Bond Price	Par (maturity Value)	Discount on bond payable	Semiannual periods	Straight line Discount amortization
$2,073,868.00	$2,400,000.00	$326,132.00	30	$10,871.07

Solution 2c:

Computation of bond interest expense
Semiannual cash payment	Discount amortization	Bond Interest Expense
$108,000.00	$10,871.07	$118,871.07

Solution 3:

Total bond interest expense over the life of bond
Particulars	Amount
Amount Repaid:
30 semiannual interest payments of $108,000 each	$3,240,000.00
Par Value at Maturity	$2,400,000.00
Total Repaid	$5,640,000.00
Less: Amount borrowed	$2,073,868.00
Total bond interest expense	$3,566,132.00

Solution 4:

Bond Amortization Table
Semiannual interest period end	Cash interest paid	Bond Interest Expense	Discount Amortization	Unamortized Discount	Carrying Value
1-Jan-17				$326,132.00	$2,073,868.00
30-Jun-17	$108,000.00	$118,871.07	$10,871.07	$315,260.93	$2,084,739.07
31-Dec-17	$108,000.00	$118,871.07	$10,871.07	$304,389.87	$2,095,610.13
30-Jun-18	$108,000.00	$118,871.07	$10,871.07	$293,518.80	$2,106,481.20
31-Dec-18	$108,000.00	$118,871.07	$10,871.07	$282,647.73	$2,117,352.27

Solution 5:

Journal Entries - Hillside
Date	Particulars	Debit	Credit
30-Jun-17	Interest Expense Dr	$118,871.07
	To Cash		$108,000.00
	To Discount on issue of bond		$10,871.07
	(Being first semiannual interest payment made and discount amortized)
31-Dec-17	Interest Expense Dr	$118,871.07
	To Cash		$108,000.00
	To Discount on issue of bond		$10,871.07
	(Being first semiannual interest payment made and discount amortized)