Hillside issues $2,800,000 of 8%, 15-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,427,190. Required:

1. Prepare the January 1, 2013, journal entry to record the bonds issuance.

Record the issue of bonds with a par value of $2,800,000 cash on January 1, 2013 at an issue price of $3,427,190.

Journal Entry Worksheet

Date	General Journal	Debit	Credit
Jan 1, 2013

2(a)

For each semiannual period, complete the table below to calculate the cash payment.

Par (maturity) value	+ / - / x / div	Annual Rate	+ / - / x / div	Year	=	Semiannual cash interest payment
					=

2(b)

For each semiannual period, complete the table below to calculate the straight-line premium amortization. (Round "Unamortized Premium" to whole dollar and use the rounded value for part 4 & 5.)

Bond price	+ / - / x / div	Par (maturity value)	=	Premium on Bonds Payable	+ / - / x / div	Semiannual periods	=	Straight-line premium amortization
			=				=

2(c)

For each semiannual period, complete the table below to calculate the bond interest expense.

Semiannual cash payment	+ / - / x / div	Premium amortization	=	Bond interest expense
			=

3.

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
Less amount borrowed
Total bond interest expense

4.

Prepare the first two years of an amortization table using the straight-line method

Semiannual Period-End	Unamortized Premium	Carrying Value
01/01/2013
06/30/2013
12/31/2013
06/30/2014
12/31/2014

5.

Prepare the journal entries to record the first two interest payments. Record the first interest payment on June 30, 2013

Journal Entry Worksheet

Date	General Journal	Debit	Credit
Jun 30, 2013

Record the second interest payment on December 31, 2013.

Journal Entry Worksheet

Date	General Journal	Debit	Credit
Dec. 31, 2013