Daan Corporation wholesales repair products to equipment manufacturers. On March 1, 2015, Daan Corporation issued $24,000,000 of

Question:

Daan Corporation wholesales repair products to equipment manufacturers. On March 1, 2015, Daan Corporation issued $24,000,000 of five-year, 8% bonds at an effective interest rate of 6%, receiving cash of $26,047,249. Interest is payable semiannually on March 1 and September 1. Journalize the entries to record the following:

a. Sale of the bonds on March 1, 2015.

b. First interest payment on September 1, 2015, using the straight-line method for premium amortization.

c. Explain why Daan Corporation received more cash than the face value of the bonds.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...