On the first day of its fiscal year, Ebert Company issued $20,000,000 of 5-year, 12% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 13%, resulting in Ebert Company receiving cash of $19,281,196. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round amounts to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Discount on Bonds Payable Bonds Payable Feedback Check My Work As the discount or premium is amortized, the carrying amount of the bond changes. As a result, interest expense also changes each period. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. For a compound transaction. If an amount box does not require an entry, leave it blank Interest Expense Discount on Bonds Payable ! Cash 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. For a compound transaction. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash Feedback Check My Work 3. Cash received (+ discount amortized) x semiannual market rate x time - interest expense (debit). Principal x semiannual contract ratex time - cash paid (credit). The discount amortized (credit) is the difference between the two amounts. b. Compute the amount of the bond interest expense for the first year. Round amounts to the nearest dollar Annual interest paid Discount amortized Interest expense for first year