Yang Corporation wholesales repair products to equipment manufacturers. On May 1, 2014, Yang Corporation issued $20,000,000 of 10-year, 9% bonds at a market (effective) interest rate of 7%, receiving cash of $22,842,560. Interest is payable semiannually on May 1 and November 1. Journalize the entries to record the following:

a. Issuance of bonds on May 1, 2014.

b. First interest payment on November 1, 2014, and amortization of bond premium for six months, using the straight-line method. (Round to the nearest dollar.)

c. Explain why the company was able to issue the bonds for $22,842,560 rather than for the face amount of $20,000,000.