ZuoTi.Pro
Question

Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600.000 par value. The bonds pay interest on June 3Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600.000 par value. The bonds pay interest on June 3Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600.000 par value. The bonds pay interest on June 3

business   finance   
1 1
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Par Value = $600,000
Issue Value = $651,181

Premium on Bonds = Issue Value - Face Value
Premium on Bonds = $651,181 - $600,000
Premium on Bonds = $51,181

Annual Coupon Rate = 8.00%
Semiannual Coupon Rate = 4.00%
Semiannual Coupon = 4.00% * $600,000
Semiannual Coupon = $24,000

Time to Maturity = 5 years
Semiannual Period = 10

Semiannual Amortization of Premium = Premium on Bonds / Semiannual Period
Semiannual Amortization of Premium = $51,181 / 10
Semiannual Amortization of Premium = $5,118

Semiannual Interest Expense = Semiannual Coupon - Semiannual Amortization of Premium
Semiannual Interest Expense = $24,000 - $5,118
Semiannual Interest Expense = $18,882

Requirement 1:

Total bond interest expense over life of bonds: Amount repaid: 10 payments of 24000 Par value at maturity Total repaid Less:

Requirement 2:

Carrying Value Semiannual Period End 01/01/2019 06/30/2019 12/31/2019 06/30/2020 12/31/2020 06/30/2021 12/31/2021 06/30/2022

Requirement 3:

Credit Date June 30 Debit 18,882 5,118 General Journal Bond Interest Expense Premium on Bonds Payable Cash Bond Interest Expe

0 0
Add a comment
Know the answer?
Add Answer to:
Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600.000 par value. The bonds pay interest on...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Ellis Company issues 9.0%, five-year bonds dated January 1, 2019, with a $480,000 par value. The...

    Ellis Company issues 9.0%, five-year bonds dated January 1, 2019, with a $480,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $499,483. The annual market rate is 8% on the issue date. 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 entries to record the first two interest payments. 1. Compute...

  • Ellis issues 8.0%, five-year bonds dated January 1, 2017, with a $430,000 par value. The bonds...

    Ellis issues 8.0%, five-year bonds dated January 1, 2017, with a $430,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $466,680. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest...

  • Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The...

    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. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two...

  • Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds...

    Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $553,268. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest...

  • Problem 10-3A Straight-Line: Amortization of bond premium LO P3 Ellis Company issues 8.0%, five-year bonds dated...

    Problem 10-3A Straight-Line: Amortization of bond premium LO P3 Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $651,181. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3....

  • Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $570,000 par value. The...

    Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $570,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $582,159. The annual market rate is 6% on the issue date. 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 entries to record the first two interest payments.

  • Ellis issues 8.5%, five-year bonds dated January 1, 2017, with a $540,000 par value. The bonds...

    Ellis issues 8.5%, five-year bonds dated January 1, 2017, with a $540,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $597,579. The annual market rate is 6% on the issue date. 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds’ life. 3. Prepare the journal entries to record the first two interest payments.

  • Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds...

    Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $553,268. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest...

  • Problem 10-3A Straight-Line: Amortization of bond premium LO P3 Ellis Company issues 8.0%, five-year bonds dated...

    Problem 10-3A Straight-Line: Amortization of bond premium LO P3 Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $651,181. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds’ life. 3....

  • Quatro Co. issues bonds dated January 1, 2019, with a par value of $850,000. The bonds'...

    Quatro Co. issues bonds dated January 1, 2019, with a par value of $850,000. The bonds' annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $893,131. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT