Snodgrass Corporation wholesales oil and grease products to equipment manufacturers. On March 1, 2006, Snodgrass Corporation issued $7,500,000 of five-year, 11% bonds at an effective interest rate of 10%. Interest is payable semiannually on March 1 and September 1. Journalize the entries to record the following:
a. Sale of bonds on March 1, 2006. (Use the tables of present values in Exhibits 3 and 4 to determine the bond proceeds. Round to the nearest dollar.)

b. First interest payment on September 1, 2006, and amortization of bond premium for six months, using the straight-line method. (Round to the nearestdollar.)

Transcribed Image Text:

Present Vau of at Compound Interest Periods 5% 7% 10% 11% 12% 13% 14% 0.95238 0.94787 0.94340 0.93897 0.93458 0.90909 0.90090 0.89286 0.88496 0.87719 2 0.90703 0.89845 0.89000 0.88166 087344 0.82645 0.81162 0.79719 0.78315 0.76947 3 0.86384 0.85161 0.83962 0.82785 0.81630 0.75132 073119 0.71178 0.69305 0.67497 4 0.82270 0.80722 0.79209 0.77732 0.76290 0.68301 0.65873 0.63552 0.61332 0.59208 5 0.78353 0.76513 0.74726 0.72988 0.71299 0.62092 0.59345 0.56743 0.54276 0.51937 6 0.74622 0.72525 0.70496 0,68533 0.66634 0.56447 0.53464 0.50663 048032 045559 7 0.71068 0.68744 0.66506 0.64351 0.62275 0.51316 0.48166 0.45235 042506 0.39964 8 0.67684 0.65160 0.62741 0.60423 0.58201 0.46651 0.43393 0.40388 0.37616 0.35056 9 0.64461 0.61763 0.59190 0.56735 0.54393 0.42410 039092 0.36061 0.33288 0.30751 10 0.61391 0.58543 0.55840 0.53273 0.50835 0.38554 0.35218 0.32197 0.29459 0.26974 Present Value o Annuity of S1 at Compound Interest Periods 5% 10% 11% 12% 13% 14% 10.95238 0.94787 0.94340 0.93897 0.93458 090909 0.90090 0.89286 0.88496 0.87719 2 185941 1.84632 1.83339 1.82063 1.80802 1.73554 1.71252 1.69005 1.66810 1.64666 3 2.72325 2.69793 2.67301 2.64848 2.62432 2.48685 2.44371 2.40183 2.36115 2.32163 4 3.54595 3.50515 3.46511 3.42580 338721 3.16987 3.10245 3.03735 2.97447 2.91371 5 4.32948 4.27028 4.21236 4.15568 4.10020 3.79079 3.69590 3.60478 3.51723 3.43308 6 5.07569 4.99553 4.91732 4.84101 4.76654 4.35526 4.23054 4.11141 3.99755 3.88867 7 5.78637 5.68297 5.58238 5.48452 5.38929 486842 4.71220 4.56376 442261 4.28830 8 6.46321 6.33457 6.20979 6.08875 597130 5.33493 5.14612 4.96764 4.79677 4.63886 9 710782 6.95220 6.80169 6.65610 6.51523 5:75902 5.53705 5.32825 5.13166 4.94637 10 7.72174 7.53763 7.36009 7.18883 7.02358 6.14457 5.88923 5.65022 5.42624 5.21612