Entries for issuing Bonds and Amortizing Premium by Straight-Line Method Favreau Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Favreau Corporation issued $2,900,000 of 4-year, 94 bonds at a market (effective interest rate of 7%, receiving cash of $3,099,345, interest is payabile semiannually on April 1 and October 1 3. Journalize the entry to record the issuance of bonds on April 1. If an amount box does not require an entry, leave it blank Cash Premium on Bonds Payable Bonds Payable Feb CMW Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account, The straight-line method of amortization provides equal amounts of amortization over the life of the bond. b. Soumale the entry to record the first interest payment on October 1 and amortization of bond premium for six months, wing the straight line method. The bond premium amortization combined with the semiannual interest payment Round to the nearest dollar. If an amount ok does not require an entry wave blank Interest Expense Premium on Bonds Payable lll 111 Cash c. Why was the company able to issue the bonds for $3,099,345 rather than for the face amount of $2,900,000? The market rate of interest is less than the contract rate of interest