Question

_{Connect Assignment: Chapter 10 2 Hillside issues $2,300,000 of 8%, 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 $1,987,457 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 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 a straight-line anmortization table. 5. Prepare the journal entries to record the first two interest payments. 12 points eBook Print Complete this question by entering your answers in the tabs below. References Req 2A to 2C Req 1 Req 3 Req 4 Req 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 $2,300,000 cash on January 1, 2019 at an issue price of $1,987,457. Note: Enter deblts before credlits. General Journal Date Debit Credit January 01 View general journal Record entry Clear entry <Req 1 Req 2A to 2C}

Answer 1

1
Date	General Journal	Debit	Credit
January 01	Cash	1,987,457
	Discount on bonds payable	312,543
	Bonds payable		2,300,000
2a
Par (maturity) value		Annual Rate		Year		Semiannual cash interest payment
$2,300,000	x	8%	x	6/12	=	$92,000
b
Par (maturity) value		Bonds price		Discount on Bonds Payable		Semiannual periods		Straight-line discount amortization
$2,300,000	-	$1,987,457	=	$312,543	÷	30	=	$10,418
c
Semiannual cash payment		Discount amortization		Bond interest expense
$92,000	+	$10,418	=	$102,418
3
Total bond interest expense over life of bonds:
Amount repaid:
30	payments of	$92,000	2760000
Par value at maturity			2,300,000
Total repaid			5060000
Less amount borrowed			1,987,457
Total bond interest expense			3,072,543
4
Semiannual Period-End	Unamortized Discount	Carrying Value
1/1/2019	$312,543	$1,987,457
6/30/2019	302,125	$1,997,875
12/31/2019	291,707	$2,008,293
6/30/2020	281,289	$2,018,711
12/31/2020	270,871	$2,029,129
Date	General Journal	Debit	Credit
June 30	Bond interest expense	102,418
	Discount on bonds payable		10,418
	Cash		92,000
December 31	Bond interest expense	102,418
	Discount on bonds payable		10,418
	Cash		92,000