Entries for Issuing Bonds and Amortizing Premium by Straight$-$Line Method

Favreau Corporation wholesales repair products to equipment manufacturers. On April $1,$ Year $1,$ Favreau Corporation issued $$35,000,000$ of five$-$year, $7\%$ bonds at a market $($effective$)$ interest rate of $6\%,$ receiving cash of $$36,492,785.$ Interest is payable semiannually on April $1$ and October $1.$

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a$.$ Journalize the entry to record the issuance of bonds on April $1.$ If an amount box does not require an entry, leave it blank.

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b$.$ Journalize the entry to record the first interest payment on October $1$ and amortization of bond premium for six months, using the straight$-$line method. The bond premium amortization is combined with the semiannual interest payment. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

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c$.$ Why was the company able to issue the bonds for $$36,492,785$ rather than for the face amount of $$35,000,000?$

The market rate of interest is

the contract rate of interest.