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Unformatted text preview: 15-12On the first day of its fiscal year, Ellis Company issued $12M of five year,10%bonds to finance its operations of producing and selling home improvementproducts. Interest is payable semiannually. The bond was issued at an effectiveinterest rate of 12%,resulting in Ellis Companay receiving cash of 11,116,854.a. Juornalize the entries to record the following:1. sale of the bonds.2. First seminually interest payment.(Amortization of discount is to be recordedannually)3.Second seminually interest payment.4. Anortization of discount at the end of the first year,using straight-line method.b. Determine the amount of the bond interest expense for the first year.1/Cash11,146,854Discount on bond payable883,146Bonds Payable12000000Interest Expense600,000Cash600,000Interest Expense600,000Cash600,000Interest Expense176,629Discount on Bond Payable176,62915-18Nonotech Innovations Co. sells orthopedic supplies to hospitals....
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This note was uploaded on 05/30/2010 for the course HCMC 1273149 taught by Professor Lethithuylinh during the Spring '10 term at Alamance Community College.
- Spring '10