Ellis issues 6.5%, five-year bonds dated January 1, 2015, 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.
1. Calculate the total bond interest expense over the bonds’ life.
2. Prepare a straight-line amortization table like Exhibit for the bonds’ life.
3. Prepare the journal entries to record the first two interest payments.