Hillside issues $4,000,000 of 6%, 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 $4,895,980.

1.

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

No	Date	General Journal	Debit	Credit
1	Jan. 1, 2013

2.(b)

For each semiannual period, complete the table below to calculate the straight-line premium amortization.

Bond price		Par (maturity value)		Premium on Bonds Payable		Semiannual periods		Straight-line premium amortization
	-		=			30	=

2.(c)

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

Semiannual cash payment		Premium amortization		Bond interest expense
$120,000			=

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			0
Less amount borrowed
Total bond interest expense			$0

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.

Journal entry worksheet

Record the first interest payment on June 30, 2013.

Date	General Journal	Debit	Credit
Jun 30, 2013
Dec. 31, 2013