Question
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
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 $8,900,000 of 6-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $9,735,273. Interest is payable semiannually on April 1 and October 1.
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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.
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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.
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