C ezto.mheducation.com/hm.tpx?_-0.6901121327824 Question 1 (of 2) 25.00 points P
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C ezto.mheducation.com/hm.tpx?_-0.6901121327824 Question 1 (of 2) 25.00 points Problem 14-2A Straight-Line: Amortization of bond discount LO P1, P2 Hillside issues $2.800,000 of 8%, 1 Syear bonds dated January 1, 2015, that pay interest semmually on June 30 and December 31. The bonds are issued at a price of $2.419,512 Required 1. Prepare the January 1, 2015, journal entry to record the bonds' issuance View transaction list Journal entry worksheet Record the issue of bonds with a par value of $2.800,000 cash on January 1, 2015 at an issue price of $2,419,512 Note: Enter debits before credits. DebitCredit Date Jan 01, 2015 View general journal Clear entry Record entryExplanation / Answer
1 Date General Journal Debit Credit Jan 01, 2015 Cash 24,19,512 Discount on bonds payable 3,80,488 Bonds payable 28,00,000 2a Par (maturity) value Annual Rate Year Semiannual cash interest payment 2800000 x 8% x 6/12 = 112000 b Par (maturity) value Bonds price Discount on Bonds Payable Semiannual periods Straight-line discount amortization 2800000 - 24,19,512 = 3,80,488 ÷ 30 = 12683 c payment Discount amortization Bond interest expense 112000 + 12683 = 124683 3 Total bond interest expense over life of bonds: Amount repaid: 30 payments of 112000 3360000 Par value at maturity 28,00,000 Total repaid 61,60,000 Less amount borrowed -24,19,512 Total bond interest expense 3740488 4 Semiannual Period-End Unamortized Discount Carrying Value 01-01-2015 3,80,488 24,19,512 06/30/2015 3,67,805 24,32,195 12/31/2015 3,55,122 24,44,878 06/30/2016 3,42,439 24,57,561 12/31/2016 3,29,756 24,70,244 5 Date General Journal Debit Credit Jun 30, 2015 Bond interest expense 1,24,683 Discount on bonds payable 12,683 Cash 1,12,000 Dec 31, 2015 Bond interest expense 1,24,683 Discount on bonds payable 12,683 Cash 1,12,000
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