Question

Hillside issues $2,500,000 of 6%, 15-year bonds dated January 1, 2015, that pay interest semiannually on...

Hillside issues $2,500,000 of 6%, 15-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,059,990. Required: 1. Prepare the January 1, 2015, 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. (Round "Unamortized Premium" to whole dollar and use the rounded value for part 4 & 5.) 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 an amortization table using the straight-line method 5. Prepare the journal entries to record the first two interest payments.

Homework Answers

Answer #1

Face Value = $2,500,000
Proceed from Issue = $3,059,990

Premium on Issue = Proceed from Issue - Face Value
Premium on Issue = $3,059,990 - $2,500,000
Premium on Issue = $559,990

Answer 1.

Answer 2-a.

Semiannual Cash Payment = Face Value * Annual Stated Rate * Year
Semiannual Cash Payment =$2,500,000 * 6% * 1/2
Semiannual Cash Payment = $75,000

Answer 2-b.

Semiannual Amortization of Premium = Premium on Bonds / Semiannual Period to Maturity
Semiannual Amortization of Premium = $559,990 / 30
Semiannual Amortization of Premium = $18,666

Answer 2-c.

Semiannual Interest Expense = Semiannual Cash Payment - Semiannual Amortization of Premium
Semiannual Interest Expense = $75,000 - $18,666
Semiannual Interest Expense = $56,334

Answer 3.

Answer 4.

Answer 5.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hillside issues $1,200,000 of 8%, 15-year bonds dated January 1, 2016, that pay interest semiannually on...
Hillside issues $1,200,000 of 8%, 15-year bonds dated January 1, 2016, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,036,935. Required: 1. Prepare the January 1, 2016, 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...
Hillside issues $1700000 of 8%, 15 yrs bomds dated jan 1,2013, that pay interest, semiannually on...
Hillside issues $1700000 of 8%, 15 yrs bomds dated jan 1,2013, that pay interest, semiannually on june 30 and december 31. the bonds are issued at a price of $1468990. a)record the issue of bonds qith per value of $1700000 cash on jan 1,2013 at an issue price of $1468990. b) for each semiannul period complete the table below to calculate the cash payment? c) for each semiannual period complete the table below to calculate the bond interest expense d)...
Trader Joes issues $5,000,000 of 8%, 4-year bonds dated January 1, 2013, that pay interest semiannually...
Trader Joes issues $5,000,000 of 8%, 4-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of 5,030,00 Prepare the January 1, 2013, journal entry to record the issuance. For each semiannual period, compute the cash payment, the straight-line premium or discount amortization the bond interest expense Cash proceeds= Cash proceeds= Bonds interest expense= cash interest paid + bond discount Bonds interest expense= Bonds interest expense= Bonds...
Hillside issues $1,500,000 of 6%, 15-year bonds dated January 1, 2015, that pay interest semiannually on...
Hillside issues $1,500,000 of 6%, 15-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,835,994.
Effective Interest Amortization On January 1, Eagle, Inc., issued $950,000 of 9%, 20-year bonds for $1,016,500...
Effective Interest Amortization On January 1, Eagle, Inc., issued $950,000 of 9%, 20-year bonds for $1,016,500 yielding an effective interest rate of 8%. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the premium. Required a. Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. b. Prepare the journal entry for the bond issuance on January 1....
Wookie Company issues 8%, five-year bonds, on January 1 of this year, with a par value...
Wookie Company issues 8%, five-year bonds, on January 1 of this year, with a par value of $97,000 and semiannual interest payments. Semiannual Period-End Unamortized Premium Carrying Value (0) January 1, issuance $ 8,051 $ 105,051 (1) June 30, first payment 7,246 104,246 (2) December 31, second payment 6,441 103,441 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on January 1. (b) The first interest payment on June 30....
Hartford Research issues bonds dated January 1, 2016, that pay interest semiannually on June 30 and...
Hartford Research issues bonds dated January 1, 2016, that pay interest semiannually on June 30 and December 31. The bonds have a $23,000 par value and an annual contract rate of 8%, and they mature in 10 years. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)    Required: Consider each of the following three separate situations.    1. The market rate at the date of issuance is 6%. (a) Complete the below...
Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value...
Paulson Company issues 6%, four-year bonds, on January 1 of this year, with a par value of $100,000 and semiannual interest payments. Semiannual Period-End Unamortized Discount Carrying Value (0) January 1, issuance $ 6,733 $ 93,267 (1) June 30, first payment 5,891 94,109 (2) December 31, second payment 5,049 94,951 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on January 1. (b) The first interest payment on June 30....
Paulson Company issues 8%, four-year bonds, on January 1 of this year, with a par value...
Paulson Company issues 8%, four-year bonds, on January 1 of this year, with a par value of $108,000 and semiannual interest payments. Semiannual Period-End Unamortized Discount Carrying Value (0) January 1, issuance $ 6,893 $ 101,107 (1) June 30, first payment 6,031 101,969 (2) December 31, second payment 5,169 102,831 Use the above straight-line bond amortization table and prepare journal entries for the following. (a) The issuance of bonds on January 1. (b) The first interest payment on June 30....
Coates Inc. issues $3 million,5-year,10% bonds at 102, with interest payable on July 1 and January...
Coates Inc. issues $3 million,5-year,10% bonds at 102, with interest payable on July 1 and January 1. The straight-line method is used to amortize bond premium. (a) Prepare the journal entry to record the sale of these bonds on January 1,2010. (b) Prepare the journal entry to record interest expense and bond premium amortization on July 1,2010, assuming no previous accrual of interest. Put the process.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT