Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The bonds
Question:
Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, 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 interest payments.
Step by Step Answer:
Part 1 Ten payments of 8125 81250 Less premium 5333 Total bond interest expense 75917 or T...View the full answer
Related Video
A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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