value 2.50 points Hillside issues $1,700,000 of 8%, 15-year bonds dated January

Question

value 2.50 points Hillside issues $1,700,000 of 8%, 15-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,080,794 Required 1. Prepare the January 1, 2013, journal entry to record the bonds' issuance Answer is complete and correct. No Credit Date Jan. 1 2013 General Journal Debit Cash 1 2,080,7 Premium on bonds payable Bonds payable 2(a)For each semiannual period, complete the table below to calculate the cash payment Answer is not complete Semiannual cash interest Par Annual Rate Year (maturity) value ment 68,0 $ 1,700,00 2(b)For each semiannual period, complete the table below to calculate the straight-line premium amortization. (Round "Unamortized Premium" to whole dollar and use the rounded value for part 4 & 5.) Answer is not complete Premium on Bonds Payable Straight-line premium amortization ar Semiannual periods Bond price (maturity value 2(c)For each semiannual period, complete the table below to calculate the bond interest expense ond interes emiannua cash remium ent amortization ex 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. Answer is not completee Total bond interest expense over life bonds Amount repaid of Par value at mat Total repaid Less amount borrowed Total bond interest expense

Explanation / Answer

Journal entry Date General Journal Debit Credit 1/1/2016 Cash 2,080,794 premium on bonds 380,794 bonds payable 1,700,000 2-a) par maturity value Annual rate / year semi annual cash payment 1,700,000 * 8% 6./12 68000 semi annual Straight line 2-b) bond price par value premium periods disc amortization 2,080,794 - 1,700,000 = 380,794 / 30 = 12693 2-c) Semi annual cash premium bond interest expense payment amortization 68,000 - 12693 = 55,307 3) total bond interest expense over life of bonds amount repaid 30 payments of 68,000 2040000 par value ant maturity 1,700,000 total repaid 3740000 less amount borrowed 2,080,794 total bond interest expense. 1,659,206 (note bond interest expense may differ slightly due to rounding) 4) unamort Carrying period premium value 1/1/2013 380,794 2,080,794 6/30/2013 368,101 2,068,101 12/31/2013 355,408 2,055,408 06/30,2014 342,715 2,042,715 12/31/2014 330,021 2,030,021 5) Date General Journal Debit Credit 6/30/2016 interest expense 55,307 Premium on bonds payable 12,693 cash 68,000 31/12/2016 interest expense 55,307 premium on bonds payble 12,693 cash 68,000

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