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hnect.html/consumer id container Iti&context.id; contextid&custom; action section&cust; er 10 Problem 6 Saved Help Save & Exit Submit Hillside issues $4,000,000 of 6%, 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 $4,895,980 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 premium amortization. 2() 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 5. Prepare the journal entries to record the first two interest payments Print Complete this question by entering your answers in the tabs belo Req 1 Req 2A to 2CReq 3 Req 4 Req 5 Prepare the January 1, 2017, journal entry to record the bonds' issuance View transaction list Journal entry worksheet Record the issue of bonds with a par value of $4,000,000 on January 1, 2017

Explanation / Answer

Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Jan-17 Cash                                                               Dr.            4,895,980    To Bonds Payable          4,000,000    To Premium on Issue of Bonds              895,980 (Record the issue of Bonds at Premium) Answer 2-a. Par (Maturity) Value Annual Rate Year = Semiannual cash interest Payment          4,000,000 X 6% X 6/12 =                   120,000 Answer 2-b. Bond Price - Par (Maturity) Value = Premium on Bonds Payable / Semiannual Periods = Straight-Line premium Amortization          4,895,980 -            4,000,000 =                895,980 /                              30 =                   29,866 Answer 2-c. Semiannual cash Payment - Premium Amortization = Bond Interest Expense              120,000 -                  29,866 =                  90,134 Answer 3. Total Bond Interest Expense over life of Bonds: 30 Payments of          120,000    3,600,000 Par Value at Maturity    4,000,000 Total Repaid    7,600,000 Less: Amount Borrowed    4,895,980 Total Bond Interest Expense    2,704,020 Answer 4. Semiannual Period-End Unamortized Premium Carrying Value 1/1/2017             895,980      4,895,980 6/30/2017             866,114      4,866,114 12/31/2017             836,248      4,836,248 6/30/2018             806,382      4,806,382 12/31/2018             776,516      4,776,516 Answer 5. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 6/30/2017 Interest Expenses                                     Dr.                  90,134 Premium on Issue of Bonds                  Dr.                  29,866    To Cash              120,000 (Record the interest Payment) 12/31/2017 Interest Expenses                                     Dr.                  90,134 Premium on Issue of Bonds                  Dr.                  29,866    To Cash              120,000 (Record the interest Payment) 6/30/2018 Interest Expenses                                     Dr.                  90,134 Premium on Issue of Bonds                  Dr.                  29,866    To Cash              120,000 (Record the interest Payment) 12/31/2018 Interest Expenses                                     Dr.                  90,134 Premium on Issue of Bonds                  Dr.                  29,866    To Cash              120,000 (Record the interest Payment)

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