Question

18 19 20 are related questions. please help me with 21

A company issues $25,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24,505,180. Using effective-interest amortization, how much interest expense will be recognized in 2017? A) $975,000 B) $1,950,000 C) $1,960,623 D) $1,960,415 Use the following to answer questions 19-20: On January 1, 2017, Ellison Co. issued eight-year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 627 6% Present value of 1 for 8 periods at .540 8% Present value of 1 for 16 periods at .623 3% .534 Present value of 1 for 16 periods at 4% 6.210 Present value of annuity for 8 periods at 6% 5.747 12.561 Present value of annuity for 8 periods at 8% Present value of annuity for 16 periods at 3% Present value of annuity for 16 periods at 4% 11.652

Answer 1

Answerto Question 21: Credit Date Jan. 05 Debit 6,000,000 3,600,000 2,400,000 July 28 General Journal Cash (600,000 * $10) Common Stock (600,000 * $6) Additional Paid-in Capital Treasury Stock (80,000 * $11) Cash Cash (80,000 * $18) Treasury Stock (80,000 * $11) Additional Paid-in Capital 880,000 880,000 Dec. 31 1,440,000 880,000 560,000 Additional Paid-in Capital on December 31, 2018 is $2,960,000 ($2,400,000 + $560,000)