On August 1, 2010, Ezzy Corporation issued a 4-year bond worth $435,000 with an interest rate of 7% per annum. Interest is to be paid semi-annually on January 31 and July 31. At the time of the issuance, the market interest rate was 4%. Ezzy Corporation amortizes any premium or discount using the straight-line method.

Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number. Use the present value tables in the textbook. For transactions with more than one debit or credit, enter the accounts in alphabetical order. a) Prepare the journal entry on August 1, 2010, to issue the bonds.

b) Redemption of the bond at fair value on August 1, 2013 (1 year before maturity).

This is the answer

a) [Aug 1] Debit Cash for $482,803. Credit Bonds Payable for $435,000. Credit Premium on Bonds for $47,803. b) [Aug 1] Debit Bonds Payable for $435,000. Debit Premium on Bonds for $11,951. Credit Cash for $446,951.

My question is how was the premium on bonds in part a calculated