Problem 14-2A Straight-Line: Amortization of bond discount LO P1, P2 Hillside is

Question

Problem 14-2A Straight-Line: Amortization of bond discount LO P1, P2

Hillside issues $2,700,000 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 $2,333,101.

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 discount amortization.
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.

Complete this question by entering your answers in the tabs below. Req 4 Req 1 Req 2A to 2C Req 3 Prepare the first two years of an amortization table using the straight-line method. Semiannual Period- Unamortized Req 5 Carrying Value End 01/01/2017 06/30/2017 2/31/2017 06/30/2018 12/31/2018 Discount $ 366,899$ 2,333,101 Req 3 Req 5

Explanation / Answer

4 Discount value=2700000-2333101=366899 Bond to be amortised over the life of the bond Number of semi-annual payments=15*2=30 semi-annual payments Discount to be amortized=366899/30=12230 Semi Annual period End Unamortized discount Discount amortized Carriying value 1/1/2017 366899 0 2333101 6/30/2017 354669 12230 2345331 (366899-12230) (2333101+12230) 12/31/2017 333439 12230 2357561 (345669-12230) (2345331+12230) 6/30/2018 321209 12230 2369791 (333439-12230) (2357561+12230) 12/31/2018 308979 12230 2382021 (321209-12230) (2369791+12230)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---