Problem:
Hillside issues $1,200,000 of 8%, 15-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $1,036,935.
Required:
Question 1: Prepare the January 1, 2013, journal entry to record the bonds' issuance.
Question 2: For each semiannual period, compute (a) the cash payment, (b) the straight-line discount amortization, and (c) the bond interest expense.
Question 3: Determine the total bond interest expense to be recognized over the bonds' life.
Question 4: Prepare the first two years of an amortization table using the straight-line method
Question 5: Prepare the journal entries to record the first two interest payments.
Note: Provide support for your rationale.