ffective Interest Amortization Ellis issues 75%, five-year bonds dated January 1
ID: 2540741 • Letter: F
Question
ffective Interest Amortization Ellis issues 75%, five-year bonds dated January 1, 2017, with a $440,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $468152. The annual market rate is 6% on the issue date. able BL Table 2 lable 2.3 and lable a (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds life 3. Prepare the journal éntries to record the first two interest payments. 4. Use the market rate at issuance to compute the present value of the remaining cash flows for these bonds as of December 31, 2019 Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Compute the total bond interest expense over the bonds' life. Total bond interest expense over life of bonds: Amount repaid payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense Required 2 Prex 4of9 NextExplanation / Answer
Amount repaid 10 payments of 16500 165,000 par value at maturity 440,000 total repaid 605,000 less amount borrowed 468,152 total bond interest expense 136,848 2) period cash bond premium unamortized Carrying end intt paid intt expense amortiztion premium value 3.75 3% 1/1/2017 28,152 468,152 6/30/2017 16500 14,045 2,455 25,697 465,697 12/31/2017 16500 13971 2529 23167 463167 6/30/2018 16500 13895 2605 20562 460562 12/31/2018 16500 13817 2683 17879 457879 6/30/2019 16500 13736 2764 15115 455116 12/31/2019 16500 13653 2847 12269 452269 6/30/2020 16500 13568 2932 9337 449337 12/31/2020 16500 13480 3020 6317 446317 6/30/2021 16500 13390 3110 3207 443207 6/31/2021 16500 13293 3207 0 440000 total 165000 136848 28,152
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