Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $13,000,000 of 5 -year, 10% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Ebert receiving cash of $12,510,050. The company uses the interest method, a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar, If an amount box does not require an entry, leave it blank. Festeack check My Wok 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. reedbate F Chedk My Work b. Compute the amount of the bond interest expense for the first vear. Round to the nearest dollar. c. Explain why the company was able to issue the bonds for only $12,510,050 rather than for the face amount of $13,000,000. The bonds sell for less than their face amount because the market rate of interest is the contract rate of interest, Investors Willing to pay the full face amount for bonds that pay a lower contract rate of interest than the rate they could earn on similar bonds (market rate). Chear M1 Whes Bonds will be issued for either a higher or lower amount than the face value whien the market and contract rates of interest are differ ent