Compute the bond interest expense

Question

Heathrow issues $2,600,000 of 5%, 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 $2,246,690.

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	(Click to select)CashAccounts receivableBond interest payablePremium on bonds payableBonds payableBond interest expenseAccounts payableDiscount on bonds payable
	(Click to select)Accounts payableDiscount on bonds payablePremium on bonds payableBonds payableBond interest payableAccounts receivableCashBond interest expense
	(Click to select)Bonds payableAccounts receivablePremium on bonds payableAccounts payableBond interest payableBond interest expenseDiscount on bonds payableCash

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 discount amortization. (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

Amount of discount amortization

$

2(c)	For each semiannual period, compute 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 semi-annual interest rate. Round intermediate calculations to the nearest dollar. 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 Discount	Carrying Value
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	(Click to select)CashDiscount on bonds payableBond interest payableBond interest expenseBonds payableAccounts receivableAccounts payablePremium on bonds payable
	(Click to select)Accounts receivableAccounts payableCashBond interest payableDiscount on bonds payablePremium on bonds payableBonds payableBond interest expense
	(Click to select)Bond interest expenseAccounts payableCashBonds payablePremium on bonds payableDiscount on bonds payableAccounts receivableBond interest payable
Dec. 31	(Click to select)Accounts receivablePremium on bonds payableDiscount on bonds payableBond interest expenseBonds payableAccounts payableBond interest payableCash
	(Click to select)Premium on bonds payableAccounts payableBonds payableDiscount on bonds payableAccounts receivableBond interest payableCashBond interest expense
	(Click to select)Bonds payableCashBond interest payablePremium on bonds payableAccounts receivableAccounts payableBond interest expenseDiscount on bonds payable