Heathrow issues 200 000 of 6 15 year bonds dated January 1
Heathrow issues $200,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December 31st. The bonds are issued at a price of $1,728,224.
HEATHROW
Bonds issued, face value $2,000,000
Annual interest 6%
Maturity in years 15
Issuance price 1,728,224
Issue price for Part 6 $2,447,990
Required:
1. Prepare the January 1, 2011, journal entry to record the bonds issuance.
2. For each semiannual period, compute
(a) the cash payment,
(b) the straight-line discount amortization,and
(c) the bond interest expense.
3. Determine the total bond interest expense to be recognized over the bonds life.
4. Prepare the first two years of an amortization table using the straight-line method.
5. Prepare the journal entries to record the first two interest payments.
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