Hillside issues $1,400,000 of 5%, 15-year bonds dated January 1, 2016, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,713,594.

1. Prepare the January 1, 2016, journal entry to record the bonds issuance.

Date	General Journal	Debit	Credit
Jan 01, 2016	Cash	1,713,594
	Bonds payable		1,400,000
	Premium on bonds payable		313,594

2. (a) For each semiannual period, complete the table below to compute the cash payment.

Par (maturity) value		Annual Rate		Year		Semiannual cash interest payment
$1,400,000	x	5.0%	x	6/12	=	$35,000

2. (b) For each semiannual period, complete the table below to compute the straight-line premium amortization.

Bond price		Par (maturity value)		Premium on Bonds Payable		Semiannual periods		Straight-line premium amortization
			=				=

2. (c) For each semiannual period, complete the table below to compute the bond interest expense.

Semiannual cash payment		Premium amortization		Bond interest expense
			=

3. Complete the below table to compute the total bond interest expense to be recognized over the bonds' life.

Total bond interest expense over life of bonds:
Amount repaid:
	payments of
Par value at maturity
Total repaid	0
Less amount borrowed
Total bond interest expense	$0

4. Prepare the first two years of an amortization table using the straight-line method

Semiannual Period-End	Unamortized Premium	Carrying Value
01/01/2016
06/30/2016
12/31/2016
06/30/2017
12/31/2017

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

Journal Entry Worksheet

Record the first interest payment on June 30, 2016.

Record the second interest payment on December 31, 2016.

Date

General Journal

Debit

Credit

Jun 30, 2016

*Enter debits before credits