Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2020, that pay interest semiannually on June

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Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2020, 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 January 1 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 a straight-line amortization table like Exhibit 10.7.

5. Prepare the journal entries to record the first two interest payments.


Exhibit 10.7.

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