Entries for issuing bonds and amortizing premium by straight-line method Smiley Corporation wholesales repair products to...

 

Transcribed Image Text:

Entries for issuing bonds and amortizing premium by straight-line method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $8,400,000 of 7-year, 9% bonds at a market (effective) interest rate of 6%, receiving cash of $9,823,307. 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 Premium on Bonds Payable Bonds Payable Feedback 9,823,307 ✓ Check My Work 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. Interest Expense Premium on Bonds Payable ✓ Cash b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for 6 months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 1,423,307 8,400,000 252,000 X ? Entries for issuing bonds and amortizing premium by straight-line method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $8,400,000 of 7-year, 9% bonds at a market (effective) interest rate of 6%, receiving cash of $9,823,307. 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 Premium on Bonds Payable Bonds Payable Feedback 9,823,307 ✓ Check My Work 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. Interest Expense Premium on Bonds Payable ✓ Cash b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for 6 months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 1,423,307 8,400,000 252,000 X ?

Answer rating: 100% (QA)

The transactions are journalized below a Cash 9823307 Premium o... View the full answer