Ellis Company issues 6.5%, five-year bonds dated January 1, 2018, with a $250,000 par value. The bonds
Question:
Ellis Company issues 6.5%, five-year bonds dated January 1, 2018, 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 10.11 for the bonds? life.
3. Prepare the journal entries to record the first two interest payments.
Exhibit 10.11 Straight-Line Amortization of Bond Premium Carrying Value Semiannual Unamortized Period-End Premium" (0) 12/31/2018 $3,600 $103,600 (1) 6/30/2019 (2) 12/31/2019 2,700 102,700 101,800 1,800 900 (3) 6/30/2020 (4) 12/31/2020 100,900 During the bond life, carrying value is adjusted to par and the amortized premium to zero. 100,000 * Total bond premium of $3,600 less accumulated periodic amortization of $900 per semiannual intere st period. * Bond par value of $100,000 plus unamortized premium.
Step by Step Answer:
Part 1 Ten payments of 8125 81250 Par value at maturity 250000 Total repaid 331250 Less amo...View the full answer
Financial Accounting Information for Decisions
ISBN: 978-1259917042
9th edition
Authors: John J. Wild
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
Students also viewed these Business questions
-
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...
-
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...
-
Zooba Company issues 9%, five-year bonds dated January 1, 2011, with a $160,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $166,494. Their annual market...
-
Please answer all questions from 1 to 12 4. Work-Power-Energy 7. A body of mass m, accelerates uniformly from rest to v, in time t,, The instantaneous power delivered to the body as a function of...
-
A mutant strain has a defective lac operator site that results in the constitutive expression of the lac operon. Outline an experiment you would carry out to demonstrate that the operator site must...
-
The volume flow rate of liquid refrigerant-134a at 10F ( = 83.31 lbm/ft 3 ) is to be measured with a horizontal Venturi meter with a diameter of 5 in at the inlet and 2 in at the throat. If a...
-
Douglas Singletary purchased a mobile home from P&A Investments, Inc. d/b/a Andys Mobile Home and Land Sales. On November 17, 2007, Singletary entered in a sales agreement with Andys to purchase a...
-
In Harley Company it costs $30 per unit ($20 variable and $10 fixed) to make a product that normally sells for $45. A foreign wholesaler offers to buy 4,000 units at $23 each. Harley will incur...
-
Jane has been offered a research consultancy job to study the impact of inequality of poverty in five SADC countries of her choice. As her former classmate, Jane has asked you to help advise her on...
-
Make a new version of your C++ program that creates instead a 2D array of 5x5 values of type boolean. Suppose indices represent people and that the value at row i , column j of a 2D array is true...
-
Selected results from Samsung, Apple, and Google follow. Required 1. Compute Samsung?s debt-to-equity ratio for the current year and the prior year. 2. Is Samsung?s financing structure more risky or...
-
Break into teams and complete the following requirements related to effective interest amortization for a premium bond. 1. Each team member is to independently prepare a blank table with proper...
-
Cassius Weatherby is a human resources manager at a major technology firm that produces software and hardware products. He would like to analyze the net promoter score (NPS) of sales professionals at...
-
What are some advantages and disadvantages of using a financial model for selecting projects?
-
How is a charter like a contract? How is it different?
-
What purpose do sensitivity analyses serve in using scoring models to choose projects?
-
What types of control systems should a customer and contractor work together to set up and utilize?
-
An Agile meeting at which risk may be discussed could be any of the following EXCEPT: a. premortum b. stand-up c. risk-based spike d. retrospective
-
The following financial statements are extracts from the accounts of Hoult Ltd: Statements of profit or loss for years ending 31 December Financial position statements for years to 31 December Annual...
-
Assume you are the accountant for Catalina Industries. John Catalina, the owner of the company, is in a hurry to receive the financial statements for the year ended December 31, 20X1, and asks you...
-
Cameron Bly is a sales manager for an automobile dealership. He earns a bonus each year based on revenue from the number of autos sold in the year less related warranty expenses. Actual warranty...
-
Traverse County needs a new county government building that would cost $ 10 million. The politicians feel that voters will not approve a municipal bond issue to fund the building since it would...
-
Use the following information to determine this companys cash flows from operating activities using the indirectmethod. MOSS COMPANY Income Statement For Year Ended December 31,2013 MOSS COMPANY...
-
1. Consider a customer at any place of employment or most recent place of employment 2. List the elements that would be required for your place of employment to deliver a single customer view. Based...
-
What ethical considerations and accountability mechanisms should leaders integrate into their vision communication strategies to ensure transparency, inclusivity, and alignment with organizational...
-
Give three reasons why an organization may support projects that do not have high-profit margins, also explain. Discuss how project selection might be different in an agile versus a plan-driven or...
Study smarter with the SolutionInn App