Straight-line amortization of bond premium
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
