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 $6,300,000 of 6-year, 8% bonds at a market (effective) interest rate of 6%, receiving cash of $6,927,102. Interest is payable semiannually on April 1 and October 1. a. 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 Feedback 6,927,102 630,000 X Check My Work 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. Journalize the entry to record the first interest payment on October 1 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. If an amount box does not require an entry, leave it blank. Interest Expense Premium on Bonds Payable Cash Entries for Issuing and Calling Bonds; Gain Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $1,581,000 of 25-year, 8% callable bonds on May 1, 2011, 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: 2011 May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. 2015 Nov. 1 Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.) Issued the bonds for cash at their face amount. If an amount box does not require an entry, leave it blank. 2011, May 1 Cash Bonds Payable 1,681,000 0 0 1,681,000 F Check My Work Correct Paid the interest on the bonds. If an amount box does not require an entry, leave it blank. 2011, Nov. 1 Interest Expense Cash 67,240 0 0 67,240 F Check My Work Correct Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank. 2015, Nov. 1 Bonds Payable. Gain an Redemption of Bonds 1,681,000 0 Cash 1,630,570 X 0 1,714,620 X