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 $4,500,000 of 7-year, 6% bonds at a market (effective) interest rate of 3%, receiving cash of $5,346,679. Interest is payable semiannually on April 1 and October 1.

Question Content Area

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.

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Question Content Area b.

Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for 6 months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. blankAccountDebitCredit blank - Select - - Select - - Select - - Select - - Select - - Select -

Question Content Area c. Why was the company able to issue the bonds for $5,346,679 rather than for the face amount of $4,500,000?

The market rate of interest is ____ the contract rate of interest.