Question
Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $3,600,000
Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method
Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $3,600,000 of 10-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $3,855,822. 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.
Cash | |||
Premium on Bonds Payable | |||
Bonds Payable |
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.
Interest Expense | |||
Premium on Bonds Payable | |||
Cash |
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