# Heathrow issues \$2,000,000 of 6%, 15-year bonds dated January 1, 2011, that pay interest semiannually on June 30 and December

## Question:

Heathrow issues \$2,000,000 of 6%, 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 \$1,728,224.

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 like Exhibit 14.7 using the straight-line method.

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

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## Step by Step Answer:

Related Book For

## Fundamental Accounting Principles

ISBN: 978-0078110870

20th Edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

Question Details
Chapter # 14
Section: Problem Set A
Problem: 2
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