Part 2 is complete, but I need help with the other sectionsplease!
Ike issues $260,000 of 9%, three-year bonds dated January 1,2015, that pay interest semiannually on June 30 and December 31.They are issued at $266,811. Their market rate is 8% at the issuedate.
1. Prepare the January 1, 2015, journal entryto record the bonds' issuance.
2. Complete the below table to calculate thetotal bond interest expense to be recognized over the bonds'life.
Total bond interest expenseover life of bonds: Amount repaid: 6 payments of $11,700 $70,200 Par value at maturity 260,000 Total repaid 330,200 Less amount borrowed 266,811 Total bond interestexpense $63,389
3. Prepare an effective interest amortizationtable for the bonds' first two years. (Enter all amountspositive values.)
Semiannual InterestPeriod-End Cash Interest Paid Bond Interest Expense Premium Amortization Unamortized Premium Carrying Value 01/01/2015 06/30/2015 12/31/2015 06/30/2016 12/31/2016
4. Prepare the journal entries to record thefirst two interest payments.
5. Prepare the journal entry to record thebonds' retirement on January 1, 2017, at 98.
Part 2 is complete, but I need help with the other sectionsplease!
Ike issues $260,000 of 9%, three-year bonds dated January 1,2015, that pay interest semiannually on June 30 and December 31.They are issued at $266,811. Their market rate is 8% at the issuedate.
1. Prepare the January 1, 2015, journal entryto record the bonds' issuance.
2. Complete the below table to calculate thetotal bond interest expense to be recognized over the bonds'life.
| |||||||||||||||||||||||||||||
3. Prepare an effective interest amortizationtable for the bonds' first two years. (Enter all amountspositive values.)
| |||||||||||||||||||||||||||||||||||||
4. Prepare the journal entries to record thefirst two interest payments.
5. Prepare the journal entry to record thebonds' retirement on January 1, 2017, at 98.
Related questions
Hillside issues $1,800,000 of 7%, 15-year bonds dated January 1,2015, that pay interest semiannually on June 30 and December 31.The bonds are issued at a price of $1,555,401.
| Required: | |
| 1. | Prepare the January 1, 2015, journal entry to record the bondsâissuance. |
2(a) For each semiannual period, complete thetable below to calculate the cash payment.
2(b) For each semiannual period, complete thetable below to calculate the straight-line discountamortization.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effective Interest Premium Amortization
Polk Incorporated issued $440,000 of 13% bonds on July 1, 2013,for $454,963.51. The bonds were dated January 1, 2013, pay intereston each June 30 and December 31, are due December 31, 2017, andwere issued to yield 12%. Polk uses the effective interest methodof amortization.
In addition, prepare a bond interest expense and premiumamortization schedule for the bonds through June 30, 2014.
Polk incorporated
Bond interest Expense and Premium Amortization Schedule(Partial)
Effective Interest Method
13% Bonds Sold to Yield 12%
| Date | Cash Credit | Interest Expense Debit | Unamortized Premium Debit | Book Value of Bonds |
| 07/01/13 | $454,963.51 | |||
| 12/31/13 | $28,600 | $27,297.81 | $1,302.19 | $????? |
| 06/30/14 | $28,600 | $27,219.68 | $1,380.32 | $452,281 |
