Question: Ellis issues 6.5%, five-year bonds dated January 1, 2017, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and

Ellis issues 6.5%, five-year bonds dated January 1, 2017, 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.

Exhibit 14.11

Semiannual Unamortized Carrying Value Premium Period-End $3,546 (0) 12/31/2017 ..... $103,546 102,659 (1) 6/30/2018 2,65

Semiannual Unamortized Carrying Value Premium Period-End $3,546 (0) 12/31/2017 ..... $103,546 102,659 (1) 6/30/2018 2,659 (2) 12/31/2018 .... 1,772 101,772 (3) 6/30/2019 885 100,885 (4) 12/31/2019....... 100,000

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