1. Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $1,586,000 of 15-year, 10% callable bonds on May 1, 20Y1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.

   Journalize the entries to record the following selected transactions:

   20Y1
   May 1	Issued the bonds for cash at their face amount.
   Nov. 1	Paid the interest on the bonds.
   20Y5
   Nov. 1	Called the bond issue at 97, the rate provided in the bond indenture. (Omit entry for payment of interest.)

   Issued the bonds for cash at their face amount.

   20Y1, May 1

   Paid the interest on the bonds.

   20Y1, Nov. 1

   Called the bond issue at 97, the rate provided in the bond indenture. (Omit entry for payment of interest.) For a compound transaction, if an amount box does not require an entry, leave it blank.

   20Y5, Nov. 1

2)Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $1,400,000 of 10-year, 12% bonds at a market (effective) interest rate of 9%, receiving cash of $1,673,168. Interest is payable semiannually on April 1 and October 1.

a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. Journalize the entry to record the first interest payment on October 1, 2016, and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank.

c. Why was the company able to issue the bonds for $1,673,168 rather than for the face amount of $1,400,000?

The market rate of interest is the contract rate of interest.