thomaslee

Oct 7, 2011, 08:55 AM

Heathrow issues $2,300,000 of 8%, 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 $2,815,190.

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. (Do not round your intermediate calculations. Omit the "$" sign in your response.)

Cash payment $

2(b)

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

Amount of premium amortized $

2(c)

For each semiannual period, compute the bond interest expense. (Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Bond interest expense $

3.

Determine the total bond interest expense to be recognized over the bonds' life. (Do not round your intermediate calculations. 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. (Round your intermediate calculations and final answers to the nearest dollar amount. 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. (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

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. (Do not round your intermediate calculations. Omit the "$" sign in your response.)

Cash payment $

2(b)

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

Amount of premium amortized $

2(c)

For each semiannual period, compute the bond interest expense. (Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Bond interest expense $

3.

Determine the total bond interest expense to be recognized over the bonds' life. (Do not round your intermediate calculations. 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. (Round your intermediate calculations and final answers to the nearest dollar amount. 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. (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