**Educational Exercise: Journal Entries for Bond Transactions****Scenario:**Hillside issues $3,000,000 of 6%, 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 $3,671,990.**Requirements:**1. Prepare the January 1 journal entry to record the bonds' issuance.2. For each semiannual period: - (a) Complete the table to calculate the cash payment. - (b) Complete the table to calculate the straight-line premium amortization. - (c) Complete the table to calculate the bond interest expense.3. Complete the 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.**Instructions:**Complete this question by entering your answers in the tabs below:- Tab: Req 1- Tab: Req 2A to 2C- Tab: Req 3- Tab: Req 4- Tab: Req 5**Journal Entries:**Prepare the journal entries to record the first two interest payments. (Round your intermediate and final answers to the nearest whole dollar.)**Journal Entry Table:**| No | Date | General Journal | Debit | Credit ||----|------------|-----------------------------|--------|---------|| 1 | June 30 | Bond interest expense | | || | | Premium on bonds payable | | || | | Cash | | 90,000 || 2 | December 31| Bond interest expense | | || | | Premium on bonds payable | | || | | Cash | | |**Action:**- View transaction list- View journal entry worksheetFor any queries related to bond amortization, interest calculations, or journal entries, please consult relevant accounting textbooks or resources. Hillside issues $3,000,000 of 6%, 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 $3,671,990.**Required:**1. Prepare the January 1 journal entry to record the bonds' issuance.2. For each semiannual period, complete the table below: - a) Calculate the cash payment. - b) Calculate the straight-line premium amortization. - c) Calculate the bond interest expense.3. Complete the table to calculate the total bond interest expense 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.**Straight-Line Amortization Table:**| Semiannual Period-End | Unamortized Premium | Carrying Value ||-----------------------|---------------------|----------------|| 01/01/2021 | | $3,671,990 || 06/30/2021 | | || 12/31/2021 | | || 06/30/2022 | | || 12/31/2022 | | |*Instructions: Round your intermediate and final answers to the nearest whole dollar. Complete this question by entering your answers in the tabs provided.*

Solution: Premium on issue of bond is computed as bond issue price less face value of bonds Semiannual cash interest is computed as = Face value * semiannual interest rate Premium amortization on bond = Total premium / Nos of semiannual periodsSolution 1: Journal Entries - Hillside Date Particulars Debit Credit 1-Jan-21 Cash $3,671,990.00 Bonds payable $3,000,000.00 Premium on issue of bond $671,990.00 (To record issue of bond at premium) Solution 2a: Computation of Semiannual cash interest payment Par (maturity Value) Annual Rate Semiannual period Semiannual cash interest payment $3,000,000.00 6% 2 $90,000.00 Solution 2b: Computation of Semiannual premium amortization Bond Price Par (maturity Value) Premium on bond payable Semiannual periods Straight line premium amortization $3,671,990.00 $3,000,000.00 $671,990.00 30 $22,400 Solution 2c: Computation of bond interest expense Semiannual cash payment Premium amortization Bond Interest Expense $90,000 $22,400 $67,600 Solution 3: Total bond interest expense over the life of bond Particulars Amount Amount Repaid: 30 semiannual interest payments of $90,000 each $2,700,000.00 Par Value at Maturity $3,000,000.00 Total Repaid $5,700,000.00 Less: Amount borrowed $3,671,990.00 Total bond interest expense $2,028,010.00 Note: I have answered first 3 parts of the question as per policy, kindly post separate question for answer of remaining parts.

Business

Accounting

Hillside issues $3,000,000 of 6%, 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 $3,671,990. 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 premium 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.

Hillside issues $3,000,000 of 6%, 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 $3,671,990. 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 premium 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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