1. Entries for Issuing A form of an interest-bearing note used by corporations to borrow on a long-term basis.Bonds and Amortizing The excess of the issue price of a stock over its par value or the excess of the issue price of bonds over their face amount.Premium by Straight-Line Method

   Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $3,700,000 of 6-year, 11% bonds at a market (effective) interest rate of 8%, receiving cash of $4,220,870. Interest is payable semiannually on April 1 and October 1.

   a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank.

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   b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

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   c. Why was the company able to issue the bonds for $4,220,870 rather than for the face amount of $3,700,000? The market rate of interest is Blank the contract rate of interest.