Posted: September 16th, 2017

Issue of Bonds Payable_Discount_Premium

Heathrow issues $1,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,223,995.

Required:
1.
Prepare the January 1, 2011, journal entry to record the bonds’ issuance. (Omit the “$” sign in your response.)

Date General Journal Debit Credit
Jan. 1

2(a)
For each semiannual period, compute the cash payment. (Omit the “$” sign in your response.)

Cash payment $

2(b)
For each semiannual period, compute the the straight-line premium amortization. (Round your answer to the nearest dollar amount. Omit the “$” sign in your response.)

Amount of premium amortized $

2(c)
For each semiannual period, compute the the bond interest expense. (Omit the “$” sign in your response.)

Bond interest expense $

3.
Determine the total bond interest expense to be recognized over the bonds’ life. (Omit the “$” sign in your response.)

Total bond interest expense $

4.
Prepare the first two years of an amortization table using the straight-line method. (Omit the “$” sign in your response.)

Semiannual
Period-End Unamortized Premium Carrying
Value
1/01/2011 $ $
6/30/2011
12/31/2011
6/30/2012
12/31/2012

5.
Prepare the journal entries to record the first two interest payments. (Omit the “$” sign in your response.)

Date General Journal Debit Credit
June 30

Dec. 31

Patton issues $670,000 of 6.0%, four-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31. They are issued at $624,896 and their market rate is 8% at the issue date.
references

10.value:
10.00 points

Problem 10-6A Part 1
1.
Prepare the January 1, 2011, journal entry to record the bonds’ issuance. (Omit the “$” sign in your response.)

Date General Journal Debit Credit
Jan. 1

11.value:
10.00 points

Problem 10-6A Part 2
2.
Determine the total bond interest expense to be recognized over the bonds’ life. (Omit the “$” sign in your response.)

Total bond interest expense $
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12.value:
10.00 points

Problem 10-6A Part 3
3.
Prepare a straight-line amortization table for the bonds’ first two years. (Make sure that the unamortized discount is adjusted to “0” and the carrying value equals to face value of the bond in the last period. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)

Semiannual
Interest Period-End Unamortized
Discount Carrying
Value
1/01/2011 $ $
6/30/2011
12/31/2011
6/30/2012
12/31/2012
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13.value:
10.00 points

Problem 10-6A Part 4
4.
Prepare the journal entries to record the first two interest payments. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.)

Date General Journal Debit Credit
June 30

Dec. 31
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