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 $3,456,448.

Required:

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

Record the issue of bonds with a par value of $4,000,000 cash on January 1, 2013 at an issue price of $3,456,448.

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		Annual Rate		Year		Semiannual cash interest payment
					=

2(b) For each Semiannual period, complete the table below to calculate the straight-line discount amortization.

Par (maturity) value		Bonds price		Discounts on Bonds Payable		Seminannual Periods		straight-line discount amortization
			=				=

2(c) For each semiannual period, complete the table below to calculate the bond interest expense.

Semiannual cash payment		Discount amortization		Bond interest expense
			=

3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds life. (Negative amounts should be indicated by a minus sign)

Total bond interest expense over life of bonds:

Amount repaid:

Payment 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 Discount	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.

(a)Record the first interest payment on June 30, 2013.

Date	General Journal	Debit	Credit
Jun 30, 2013

(b)Record the second interest payment on December 31, 2013.

Date	General Journal	Debit	Credit
Dec. 31, 2013