b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash To record investment purchase. Debit 77,970 0 Credit 0 77,970 c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Interest Revenue To record year end adjusting entry. Debit Credit 299 0 x 3,600 0 ✓ 0 3,899 x a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Market Interest Discount Bond Amortization Amortized Cost Jul. 1, Year 1 $ 77,970 Jan. 1, Year 2 $ 3,600 $ Jul. 1, Year 2 3,600 3,899 * $ 3,913 x 299 x 78,269 x 313 x 78,582 x

b. Record the entry for the purchase of the bonds by West Company on July 1. Date Account Name Jul. 1, Year 1 Investment in HTM Securities Cash To record investment purchase. Debit 77,970 0 Credit 0 77,970 c. Record the adjusting entry by West Company on December 31. The fair value of the bonds at December 31 was $81,000. Date Account Name Dec. 31, Year 1 Investment in HTM Securities Interest Receivable Interest Revenue To record year end adjusting entry. Debit Credit 299 0 x 3,600 0 ✓ 0 3,899 x a. Prepare a bond amortization schedule for the current year and the following year using the straight-line interest method. Note: Round each amount entered into the schedule below to the nearest whole dollar. Date Stated Interest Market Interest Discount Bond Amortization Amortized Cost Jul. 1, Year 1 $ 77,970 Jan. 1, Year 2 $ 3,600 $ Jul. 1, Year 2 3,600 3,899 * $ 3,913 x 299 x 78,269 x 313 x 78,582 x

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.1E

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[The following information applies to the questions displayed below.] Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,456,448. Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Req 1 Req 2A to 2C Req 3 Req 4 Req 5 For each…
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