Question

# Problem 14-3A Straight-line amortization of bond premium L.O. P1, P3 Heathrow issues $2,800,000 of 8%,

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 $3,427,190. Required: 1. Prepare the January 1, 2011, journal entry to record the bonds’ issuance. (Omit the "$" sign in your response.) Date General Journal Debit Credit Jan. 1 2(a) For each semiannual period, compute the cash payment. (Do not round your intermediate calculations. Omit the "$" sign in your response.) Cash payment $ ______ 2(b) For each semiannual period, compute the the straight-line premium amortization. (Round your final answer to the nearest dollar amount. Omit the "$" sign in your response.) Amount of premium amortized $ _______ 2(c) For each semiannual period, compute the the bond interest expense. (Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.) Bond interest expense $ ______ 3. Determine the total bond interest expense to be recognized over the bonds' life. (Do not round your intermediate calculations. Omit the "$" sign in your response.) Total bond interest expense $ _________ 4. Prepare the first two years of an amortization table using the straight-line method. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Semiannual Period-End Unamortized Premium CarryingValue 1/01/2011 $ _________ $_________ 6/30/2011 _________ __________ 12/31/2011 _________ __________ 6/30/2012 _________ __________ 12/31/2012 _________ __________ 5. Prepare the journal entries to record the first two interest payments. (Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Date General Journal Debit Credit June 30 ______________ ______________ __________ Dec. 31 ______________ ______________ ___________

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