Question

required information the following information applies to the questions displayed below. hillside issues $3,000,000 of 6%, 15 - year bonds dated january 1, 2027, that pay interest semiannually on june 30 and december 31. the bonds are issued at a price of $2,592,334. complete this question by entering your answers in the tabs below. req 1 req 2a to 2c req 3 req 4 req 5 prepare the journal entries to record the first two interest payments. note: round your intermediate and final answers to the nearest whole dollar. view transaction list journal entry worksheet 1 2 record the first interest payment on june 30. note: enter debits before credits. date general journal debit credit june 30 bond interest expense 103,078 premium on bonds payable 13,078 cash 90,000 record entry clear view general journal

Explanation:

Step1: Calculate cash payment

Semiannual cash interest = Face value × $\frac{\text{Annual rate}}{2}$
$\$3,000,000 \times \frac{6\%}{2} = \$90,000$

Step2: Calculate discount amortization

First, find total discount: Face value - Issue price
$\$3,000,000 - \$2,592,334 = \$407,666$
Semiannual discount amortization = $\frac{\text{Total discount}}{\text{Total semiannual periods}}$
Total semiannual periods = $15 \times 2 = 30$
$\frac{\$407,666}{30} \approx \$13,589$

Step3: Calculate interest expense

Interest expense = Cash payment + Discount amortization
$\$90,000 + \$13,589 = \$103,589$

Step4: First interest entry (June 30)

Debit Bond Interest Expense, Debit Discount on Bonds Payable, Credit Cash

Step5: Second interest entry (Dec 31)

Same calculation applies for the second payment, amounts are identical to the first.

Answer:

June 30 (First Interest Payment)

Date	General Journal	Debit	Credit
	Discount on Bonds Payable	13,589
	Cash		90,000

December 31 (Second Interest Payment)

Date	General Journal	Debit	Credit
	Discount on Bonds Payable	13,589
	Cash		90,000

Note: The original worksheet incorrectly used "Premium on bonds payable"; since bonds were issued at a price below face value, it is a discount, not a premium.