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

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 bondsâ€™ life.

2. Prepare a straight- line amortization table like Exhibit 14.11 for the bondsâ€™ life.

Ellis issues 6.5%, five- year bonds dated January 1, 2013,

3. Prepare the journal entries to record the first two interestpayments.

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

Step by Step Solution

★★★★★

3.40 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Bonds issued par value Annual interest ELLIS Maturity in years Iss... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

267-B-A-L (3026).xlsx

300 KBs Excel File

Students Have Also Explored These Related Accounting Questions!

gravity model is proposed to generate a 3x3 trip distribution matrix. The expected total trip productions are 0 = 250, 02 = 1 where cij is A doube-constrained 415, and 03 = 395, and the expected trip...

Prepare the general journal entries to record the following transactions of the Quinones County General Fund: 1. Quinones County borrowed $1,000,000 by issuing six-month tax anticipation notes...

Prepare budgetary and proprietary journal entries to record the following year- end adjustments: 1. An accrual of $ 60,000 was made for salaries earned the last week of September, to be paid in...

Ellis issues 8.0% five year bonds dated January 1, 2015, with a $600,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $651,185. The annual market rate is...

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...

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...

Ripkin company issues 9%, five year bonds dated January 1, 2013, with a 320,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of 332,988 there annual market...

Ripkin Company issues 9%, five- year bonds dated January 1, 2013, with a $ 320,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $ 332,988. Their annual...

252Fims.mnheducation.com 252Fmgmiddleware%252Fmheproducts 252Fims cami Saved Ellis Company issues 75%, five year bonds dated January 1, 2020, with a $520.000 par value. The bonds pay interest on June...

Snow Co's inventory at the end of the year, included the following items: Description Raw materials (per unit) Direct costs (per unit) Expected selling price (per unit) Selling expenses (per unit)...

Acetic acid (HC2H3O2) is a weak acid (Ka = 1.8 x10-5). Calculate the pH of a 10.6 M HC2H3O2 solution. %3D 1.86 1.66 1.55 4.23 2.91

4.88 Consider the density function of Review Exercise 4.85. Demonstrate that Chebyshevs theorem holds for k = 2 and k = 3.

Cash Surplus or Deficit A firm has estimated the two-month cash budget below. What is the cash surplus or deficit for these two months? (LG14-12) ($ in millions) MAR APR Sales 120.0 130.0 Cash...

Why does the Bad Debts Expense account usually not have the same adjusted balance as the Allowance for Doubtful Accounts?

Why might a business prefer a note receivable to an account receivable?

Refer to the balance sheet of Apple in Appendix A. Does it use the direct write-off method or allowance method in accounting for its Accounts Receivable? What is the realizable value of its...

A project has an initial cost of $6,900. The cash inflows are $850, $2,400, $3,100, and $4,100 over the next four years, respectively. What is the payback period? Simple Interest = PV + PVrt FV =...

Mini-Case: Lauren, age 65 believes that her Old Age Security (OAS) pension will be subject to clawback. She is trying to understand what it means. The maximum monthly OAS pension in 2022 is $685.50....

please answer this question with work shown 4. An investment is expected to yield $700 in three years, $900 in five years, and $1100 in seven years. What is the present value of this investment if...