Ellis issues 8.0%, five-year bonds dated january 1, 2018, with a $530,000 par value. the bonds pay interest on june 30 and december 31 and are issued at a price of $575,210. the annual market rate is 6% on the issue date.
requlrec:
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.

1. Total interest rate is $166,790

2. Refer to the attached file for the straight-line amortization table for the bonds' life.

3.

To record interest rate paid in 30th June 2018:

Dr Interest expenses                            16,679

Dr Premium on bond payable             4,521

Cr Cash                                                 21,200

To record interest rate paid in 31st Dec 2018:

Dr Interest expenses                            16,679

Dr Premium on bond payable             4,521

Cr Cash                                                 21,200

Explanation:

Total interest rate as followed : Interest payment - Premium on bond payable = 530,000 x 8% /2 x 10 - (575,210 - 530,000) =166,790.