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Compute the straight-line premium amortization

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Question 1 - On January 1, 2015, Eagle borrows $100,000 cash by signing a four-year, 7% installment note. The note requires four equal total payments of accrued interest and principal on December 31 of each year from 2015 through 2018.

Required -

a) Compute the amount of each of the four equal total payments.

b) Prepare a amortization table for this installment note.

Question 2 - Hillside issues $4,000,000 of 6%, 15-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $4,895,980.

Required -

a) Prepare the January 1, 2015, journal entry to record the bonds' issuance.

b) For each semiannual period, compute (a) the cash payment, (b) the straight-line premium amortization, and (c) the bond interest expense.

c) Determine the total bond interest expense to be recognized over the bonds' life.

Reference no: EM132847462

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