Hillside issues $2,900,000 of 9%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $2,505,923.Required:1. Prepare the January 1 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 a straight-line amortization table.5. Prepare the journal entries to record the first two interest payments. For each semiannual period, compute (a) the cash payment, (b) the straight-line discount amortization, and (c) the bond interest expense. (Round your final answers to the nearest whole dollar.)Prepare the January 1 journal entry to record the bonds’ issuance. NoDateGeneral JournalDebitCredit1January 01Cash2,505,923 Discount on bonds payable 394,077 Bonds payable 2,900,000 Par (maturity) value Annual Rate Year Semiannual cash interest payment 2(a)$2,900,000 9% 6/12= Par (maturity) value Bonds price Discount on Bonds Payable Semiannual periods Straight-line discount amortization2(b)$2,900,000 $2,505,923= = Semiannual cash payment Discount amortization Bond interest expense 2(c) = Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. Total bond interest expense over life of bonds:Amount repaid: payments of Par value at maturity Total repaid0Less amount borrowed Total bond interest expense$0Prepare the first two years of a straight-line amortization table. (Round your intermediate and final answers to the nearest whole dollar.) Semiannual Period-EndUnamortized DiscountCarrying Value01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 Prepare the journal entries to record the first two interest payments. (Round your intermediate and final answers to the nearest whole dollar.) NoDateGeneral JournalDebitCredit1June 30Bond interest expense Discount on bonds payable Cash 2December 31Bond interest expense Discount on bonds payable Cash

The discount on bonds is calculated as difference between face value and issue price of bonds…

Answered: Hillside issues $2,900,000 of 9%,…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PB: Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

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Question

Hillside issues $2,900,000 of 9%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31.

The bonds are issued at a price of $2,505,923.

Required:
1. Prepare the January 1 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 a straight-line amortization table.
5. Prepare the journal entries to record the first two interest payments.

For each semiannual period, compute (a) the cash payment, (b) the straight-line discount amortization, and (c) the bond interest expense. (Round your final answers to the nearest whole dollar.)

Prepare the January 1 journal entry to record the bonds’ issuance.

No	Date	General Journal	Debit	Credit
1	January 01	Cash	2,505,923
		Discount on bonds payable		394,077
		Bonds payable		2,900,000

	Par (maturity) value	Annual Rate		Year		Semiannual cash interest payment
2(a)	$2,900,000	9%		6/12	=

	Par (maturity) value	Bonds price		Discount on Bonds Payable		Semiannual periods		Straight-line discount amortization
2(b)	$2,900,000	$2,505,923	=				=

	Semiannual cash payment	Discount amortization		Bond interest expense
2(c)			=

Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

Total bond interest expense over life of bonds:
Amount repaid:
	payments of
Par value at maturity
Total repaid	0
Less amount borrowed
Total bond interest expense	$0

Prepare the first two years of a straight-line amortization table. (Round your intermediate and final answers to the nearest whole dollar.)

Semiannual Period-End	Unamortized Discount	Carrying Value
01/01/2021
06/30/2021
12/31/2021
06/30/2022
12/31/2022

Prepare the journal entries to record the first two interest payments. (Round your intermediate and final answers to the nearest whole dollar.)

No	Date	General Journal
1	June 30	Bond interest expense
		Discount on bonds payable
		Cash

2	December 31	Bond interest expense
		Discount on bonds payable
		Cash

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