Question

Hillside issues $1,500,000 of 6%, 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 $1,835,994. Required: 1. Prepare the January 1 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 premium amortization. 2C) 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. Req1 Req 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 $1,500,000 cash on January 1, 2019 at an issue price of $1,835,994. Note: Enter debits before credits

Answer 1

No Credit Debit 1,835,994 Journal Date Aacount titles & explanation 1/1/2019 Cash 6% Bonds payable Premium on bonds payable (To record the issuance of bond) 1,500,000 335,994

No. 2a) Cash payment 2b) Total premium Annual premium Semi Annual premium Formula Face value X Rate X 6/12 Isuue price - Face value Total premium/No of years Annual premium/2 Cash payment-Semi Annual premium Interest expesne semi annually X 2X No of years Calculation 1500000*6%*6/12 1835994-1500000 335994/15 22400/2 Amount 45,000 335,994 22,400 $ 11,200 Amortization semiannualy 2c) Interest expesne semi annually 45000-11200 33,800 3 Total interest expense 33800*2*15 1,014,000 Date Face value Coupon 1/1/2019 6/30/2019 1,500,000 45,000 12/31/2019 1,500,000 45,000 6/30/2020 1,500,000 45,000 12/31/2020 1,500,000 45,000 Amortization table-St line Book Value = Previous book value - Premium Premium Amortization Interest expense amortization 1,835,994 11,200 33,800 1,824,794 11,200 33,800 1,813,594 11,200 33,800 1,802,394 11,200 33,800 1,791,194

33,800 11,200 6/30/2019 Interest expense Premium on bonds payable Cash (To record the semi annual interest payment) 45,000 33,800 11,200 12/31/2019 Interest expense Premium on bonds payable Cash (To record the semi annual interest payment) 45,000