Smiley Corporation wholesales repair products to equipment manufacturers. On April $1,$ Year $1,$ Smiley issued $$12,700,000$ of five$-$year, $11\%$ bonds at a market $($effective$)$ interest rate of $9\%,$ receiving cash of $$13,704,946.$ Interest is payable semiannually on April $1$ and October $1.$

Required:

a$.$ Journalize the entries to record the following. Refer to the Chart of Accounts for exact wording of account titles.

$1.$ Issuance of bonds on April $1,$ Year $1.$

$2.$ First interest payment on October $1,$ Year $1,$ and amortization of bond premium for six months, using the straight$-$line method. $($Round to the nearest dollar.$)$

b$.$ Explain why the company was able to issue the bonds for $$13,704,946$ rather than for the face amount of $$12,700,000.$