Hillside issues $1,000,000 of 6%, 15-year bonds dated January 1, 2016, that pay

Question

Hillside issues $1,000,000 of 6%, 15-year bonds dated January 1, 2016, that pay interest semiannualy on June 30 and December 31. The bonds are issued at a price of $864,113. Required: 1. Prepare the January 1, 2016, jourmal entry to record the bonds' issuance. Journal entry worksheet Record the issue of bonds with a par value of $3,000,000 cash on Jamuary 2016 at an issue price of $864,113 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

Explanation / Answer

Journal entry Date General Journal Debit Credit 1/1/2017 Cash 864,113 discount on bonds 135,887 bonds payable 1,000,000 2-a) par maturity value Annual rate / year semi annual cash payment 1,000,000 * 6% 6./12 30000 semi annual Straight line 2-b) par value bonds price Discount periods disc amortization 1,000,000 - 864,113 = 135,887 / 30 = 4530 2-c) Semi annual cash Discount bond interest expense payment amortization 30,000 + 4530 = 34,530 3) total bond interest expense over life of bonds amount repaid 30 payments of 30,000 900000 par value ant maturity 1,000,000 total repaid 1900000 less amount borrowed 864,113 total bond interest expense. 1,035,887 (note bond interest expense may differ slightly due to rounding) 4) unamort Carrying period discount value 1/1/2017 135,887 864,113 6/30/2017 131,357 868,643 12/31/2017 126,828 873,172 6/30/2018 122,298 877,702 12/31/2018 117,769 882,231 5) Date General Journal Debit Credit 6/30/2016 interest expense 34,530 Discount on bonds payable 4,530 cash 30,000 31/12/2016 interest expense 34,530 discount on bonds payable 4,530 cash 30,000

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.