Bonds payable$$record issuance and premium amortization Jessie Co$.$ issued $$3$ million face amount of $9\%,20-$year bonds on July $1,2022.$ The bonds pay interest on an annual basis on June $30$ each year.

Required:

Assume that market interest rates were slightly lower than $9\%$ when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.

Independent of your answer to a$,$ assume that the proceeds were $$3,120,000.$ Use the horizontal model $($or write the journal entry$)$ to show the effect of issuing the bonds.

Calculate the interest expense that Jessie Co$.$ will show with respect to these bonds in its income statement for the year ended December $31,2022,$ assuming that the premium of $$120,000$ is amortized on a straight$-$line basis.

Answer rating: 100% (QA)

1 When market interest rates are lower than the coupon rate 9 the bonds become more attractive to in... View the full answer