Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The bondspay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is6% on the issue date.Required1. Calculate the total bond interest expense over the bonds’ life.2. Prepare a straight-line amortization for the bonds’ life.3. Prepare the journal entries to record the first two interest payments.
Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The bondspay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is6% on the issue date.Required1. Calculate the total bond interest expense over the bonds’ life.2. Prepare a straight-line amortization for the bonds’ life.3. Prepare the journal entries to record the first two interest payments.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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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 for the bonds’ life.
3. Prepare the
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