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Heathrow issues $1,800,000 of 7%, 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 $1,555,401.
1. Prepare the January 1, 2011, journal entry to record the bonds’ issuance.
2(a) For each semiannual period, compute the cash payment. (Do not round your intermediate calculations.)
(b) For each semiannual period, compute the the straight-line discount amortization. (Round your answer to the nearest dollar amount.)
(c) For each semiannual period, compute the bond interest expense. (Round your intermediate calculations and final answer to the nearest dollar amount.)
3. Determine the total bond interest expense to be recognized over the bonds' life. (Do not round semi-annual interest rate. Round intermediate calculations to the nearest dollar.)
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.)
5. Prepare the journal entries to record the first two interest payments. (Round your intermediate calculations and final answers to the nearest dollar amount.)
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