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Problem 1 4 - 1 0 AB ( Algo ) Effective Interest: Amortization of bond premium LO P 5 Ellis Company issues 7 . 0
Problem AB Algo Effective Interest: Amortization of bond premium LO P
Ellis Company issues fiveyear bonds dated January with a $ par value. The bonds pay interest on June and December and are issued at a price of $ The annual market rate is on the issue date.
Required:
Compute the total bond interest expense over the bonds' life.
Prepare an effective interest amortization table for the bonds' life.
Prepare the journal entries to record the first two interest payments.
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Compute the total bond interest expense over the bonds' life.
Total bond interest expense over life of bonds:
Amount repaid:
tablepayments ofPar value at maturity,,Total repaid,,Less amount borrowed,,Total bond inte,st expense,$
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