Ellis issues 7.0%, five-year bonds dated January 1, 2017, with a $580,000 par value. The bonds...

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Accounting

Ellis issues 7.0%, five-year bonds dated January 1, 2017, with a$580,000 par value. The bonds pay interest on June 30 and December31 and are issued at a price of $604,738. The annual market rate is6% on the issue date.

Required:
1. Complete the below table to calculate thetotal bond interest expense over the bonds' life.
2. Prepare a straight-line amortization table forthe bonds’ life.
3. Prepare the journal entries to record the firsttwo interest payments.
Complete the below table to calculate the total bond interestexpense over the bonds' life.
Total bond interest expense over lifeof bonds:
Amount repaid:
payments of:
Par value at maturity:
Total repaid:
Less amount borrowed:
Total bond interestexpense:
Prepare a straight-line amortization table for the bonds’life.
Semiannual Period-End Unamortized Premium Carrying Value
01/01/2017
06/30/2017
12/31/2017
06/30/2018
12/31/2018
06/30/2019
12/31/2019
06/30/2020
12/31/2020
06/30/2021
12/31/2021
Prepare the journal entries to record the first two interestpayments.
Record the first interest payment on June 30, 2017.
Date General Journal Debit Credit
Jun 30, 2017
Record the second interest payment on December 31, 2017.
Date General Journal Debit Credit
Dec 31, 2017

Answer & Explanation Solved by verified expert

4.2 Ratings (543 Votes)

All working forms part of the answer Requirement 1 Amount Repaid 10 5 years x 2 semi annual payments 10 payments of 2030000 Interest 580000 x 7 x 612 20300000 Par Value at Maturity 58000000 Total Repayments 78300000 Less Amount borrowed See Answer

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