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

Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley issued $9,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 4%, receiving cash of $11,207,443. Interest is payable semiannually on April 1 and October 1.

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

	Cash	fill in the blank	fill in the blank
		fill in the blank	fill in the blank
	Bonds Payable	fill in the blank	fill in the blank

b. Journalize the entry to record the first interest payment on October 1, Year 1, 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.

		fill in the blank	fill in the blank
		fill in the blank	fill in the blank
		fill in the blank	fill in the blank

c. Why was the company able to issue the bonds for $11,207,443 rather than for the face amount of $9,000,000? The market rate of interest is the contract rate of interest.

Estules for going Promo by Straight Line Method Smiley Corporation will repair products to equipment manufacturers on Xr 1. Ver 1. Smiley inued 1.000.000 10-18, bontsutamatut the water en cas / 11.22.6. semua on Apr 1 and October 1 a. Journalize the entry to record theme of bond 11. martxoaren Cash monds Payable 100.000 b. Southentry to record first interest want on October 1. umrtion of both the biar lol 000 Why was the company ste to the body for $11,207,40 than for the face out 1.000.000 The matrate interestis