Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method

Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2014, Daan Corporation issued $2,800,000 of 10-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $2,990,264. Interest is payable semiannually on April 1 and October 1.

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Hint(s)

a. Journalize the entry to record the issuance of bonds on April 1, 2014. For a compound transaction, if an amount box does not require an entry, leave it blank.

	Cash	2990264
	Premium on Bonds Payable		190264
	Bonds Payable		2800000

b. Journalize the entry to record the first interest payment on October 1, 2014, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank.

	Interest Expense
	Premium on Bonds Payable
	Cash		252000

I am having a hard time working out b.

Can you provide step by step of how I arrive at the correct answer? Thank you.