ne4 Required Problem 1 Help Save Problem 143A StraightLine A

ne4 Required Problem 1 Help Save Problem 14-3A Straight-Line: Amortization of bond premium LO P1, P3 Hillside issues S1,800,000 of 7%, 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 $2,203,194. 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-ine premium amortization 2ic) 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. nces Complete this question by entering your answers in the tabs below. Req 1 Req 2A to 2C Req 3 Req 4 Req 5 Prepare the January 1, 2017, journal entry to record the bonds\' issuance. Prey1 of1Next

Solution

Journal entries: Date Accounts title and expalanations Debit $ Credit $ Jan 1 17 Cash account Dr. 2203194       Bonds payable Account 1800000       Premium on bonds payable account 403194 Req 2: Par value * Annual rate   * Year    = Semi Annual Interest 1800000 7% 0.5 63000 Bond price        - Par value       = Premium          / Semi Annual periods   = SL Premium Amortized 2203194 1800000 403194             / 30 13440 Semi Annual Interest   - Premium = Bond interest Amortized Expense 63000      - 13440    = 49560 Req 3 Total Bond interest Amount repaid 30 payment of $ 63000 1890000 Par value of bonds 1800000 Total repayments 3690000 Less: Amount borrowed 2203194 Total interest expense 1486806 Req 4: Semi annual Unamortized Carrying value period Premium 01.01..17 403194 2203194 30.06.17 389754 2189754 31.12.17 376314 2176314 30.06.18 362874 2162874 31.12.18 349434 2149434 Req 5: Date Accounts title and explanations Debit Credit 30.06.17 Interest expense Dr. 49560 Premium on bonds payable Account Dr. 13440       Bonds payable account 63000 31.12.17 Interest expense Dr. 49560 Premium on bonds payable Account Dr. 13440       Bonds payable account 63000