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Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5 -year, 10% bonds at a
Amortize premium by interest method Shunda Corporation wholesales parts to appliance manufacturers. On January 1, Shunda issued $20,000,000 of 5 -year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $21,622,179. Interest is payable semiannually. Shunda's fiscal year begins on January 1 . 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. Feedoack Theck My Whork Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Feedback T Check My Work As the discount or premium is amortized, the carrying amount of the bond changes. As a result, interest expense also changes each period. Compare the rate on the bonds and the market rate. 3. Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require a entry, leave it blank. b. Determine the bond interest expense for the first year. Round to the nearest dollar
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