Ellis issues 6.5%, five- year bonds dated January 1, 2013, with a $ 250,000 par value. The
Question:
Ellis issues 6.5%, five- year bonds dated January 1, 2013, with a $ 250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $ 255,333. The annual market rate is 6% on the issue date.
Required
1. Calculate the total bond interest expense over the bonds’ life.
2. Prepare a straight- line amortization table like Exhibit 14.11 for the bonds’ life.
3. Prepare the journal entries to record the first two interestpayments.
Transcribed Image Text:
amortized Carrying Semiannual Period-End Un Premium Valuet (0) 12/31/2013 (I) 6/30/2014... (2) 12131/2014 (3) 6/3012015 (4 12/31/2015 $3,546 2.659 1,772 885 $103.546 102.659 101,772 100.885 100,000 03 During the bond life, carrying value is adjusted to par and the amortized premium to zero. Total bond premium (of $3546) less accumulated ($887 per semiannual interest penod). Bond par alue of SI00.000 plus unamortized premium Adjusted for rounding. c amotization
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Related Book For
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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