Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010. Interest is payable semiannually on April 1 and October 1.

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.

	Cash	fill in the blank 4c7401feffb8002_2	fill in the blank 4c7401feffb8002_3
	Premium on Bonds Payable	fill in the blank 4c7401feffb8002_5	fill in the blank 4c7401feffb8002_6
	Bonds Payable	fill in the blank 4c7401feffb8002_8	fill in the blank 4c7401feffb8002_9

Feedback

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, 20Y1, and amortization of bond premium for six months, using the straight-line method. If an amount box does not require an entry, leave it blank.

	Interest Expense	fill in the blank fdafe4017066030_2	fill in the blank fdafe4017066030_3
	Premium on Bonds Payable	fill in the blank fdafe4017066030_5	fill in the blank fdafe4017066030_6
	Cash	fill in the blank fdafe4017066030_8	fill in the blank fdafe4017066030_9