Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $7,100,000 of S-ye 6% bonds at a market (effective) interest rate of 3%, receiving cash of $8,082,161. Interest is payable semiannually on April 1 and Octob 1. a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, if an amount box does not require a entry, leave it blank. Cash 8,082,161 Premium on Bonds Payable 982,161 V Bonds Payable 7,100,000 Feedback 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, 2016, 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.) For a comnnind traneartinn if an amount hov dnes ot renire an antrv it hlank Check My Work Previous Next b. Journalize the entry to reco rd the first interest payment on October 1, 2016, and amortization of bond premium for six months, using The bond premium amortization is combined with the semiannual interest payment. (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 213,000 Feedback 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. c. Why was the company able issue the bonds for $8,082,161 rather than for the face amount of $7,100.0007 The market rate of interest is less than the contract rate of interest. Feedback Check My Work Prewous Next) Check My Work