EX 14-7 Entries for issuing bonds and amortizing premium by straight-line method OBJ. 2,3 Favreau Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Favreau Corporation issued $35,000,000 of five-year, 7% bonds at a market (effec- tive) interest rate of 6%, receiving cash of $36,492,785. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following: a. Issuance of bonds on April 1. b. 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. Explain why the company was able to issue the bonds for $36,492,785 rather than for the face amount of $35,000,000. C. OBJ. 6 EX 14-15 Times interest earned Loomis, Inc., reported the following on the company's income statement in two recent years: Current Year Prior Year Interest expense $ 13,500,000 $ 16,000,000 Income before income tax expense 310,500,000 432,000,000 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. b. Is this ratio improving or declining