QUESTION IMAGE
Question
ellis company issues 8.0%, five-year bonds dated january 1, 2027, 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.complete this question by entering your answers in the tabs below.required 1 required 2 required 3prepare a straight-line amortization table for the bonds’ life.note: round your intermediate and final answers to the nearest whole dollar.semiannual interest period-end unamortized premium carrying value01/01/202706/30/202712/31/202706/30/202812/31/202806/30/202912/31/202906/30/203012/31/203006/30/203112/31/2031
Step1: Calculate total bond premium
Total Premium = Issue Price - Par Value
$\$575,210 - \$530,000 = \$45,210$
Step2: Calculate semiannual premium amortization
Number of periods = $5 \times 2 = 10$
Semiannual Amortization = $\frac{\text{Total Premium}}{\text{Number of Periods}}$
$\frac{\$45,210}{10} = \$4,521$
Step3: Compute initial unamortized premium
Initial Unamortized Premium = Total Premium
$\$45,210$
Step4: Compute initial carrying value
Initial Carrying Value = Issue Price
$\$575,210$
Step5: Calculate periodic values
For each period:
Unamortized Premium (Current) = Previous Unamortized Premium - $\$4,521$
Carrying Value (Current) = Previous Carrying Value - $\$4,521$
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| Semiannual Interest Period-End | Unamortized Premium | Carrying Value |
|---|---|---|
| 06/30/2027 | $\$45,210 - \$4,521 = \$40,689$ | $\$575,210 - \$4,521 = \$570,689$ |
| 12/31/2027 | $\$40,689 - \$4,521 = \$36,168$ | $\$570,689 - \$4,521 = \$566,168$ |
| 06/30/2028 | $\$36,168 - \$4,521 = \$31,647$ | $\$566,168 - \$4,521 = \$561,647$ |
| 12/31/2028 | $\$31,647 - \$4,521 = \$27,126$ | $\$561,647 - \$4,521 = \$557,126$ |
| 06/30/2029 | $\$27,126 - \$4,521 = \$22,605$ | $\$557,126 - \$4,521 = \$552,605$ |
| 12/31/2029 | $\$22,605 - \$4,521 = \$18,084$ | $\$552,605 - \$4,521 = \$548,084$ |
| 06/30/2030 | $\$18,084 - \$4,521 = \$13,563$ | $\$548,084 - \$4,521 = \$543,563$ |
| 12/31/2030 | $\$13,563 - \$4,521 = \$9,042$ | $\$543,563 - \$4,521 = \$539,042$ |
| 06/30/2031 | $\$9,042 - \$4,521 = \$4,521$ | $\$539,042 - \$4,521 = \$534,521$ |
| 12/31/2031 | $\$4,521 - \$4,521 = \$0$ | $\$534,521 - \$4,521 = \$530,000$ |