Problem 2 Using the bond from Practice Exercise 14-38, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar.

PE14-5A Issuing bonds at a premium On the first day of the fiscal year, a company issues an $8,600,000, 11%, five-year bond that pays semiannual interest of $473,000 ($8,600,000 x 11% x 14), receiving cash of $8,932,035. Journalize the bond issuance.

PE14-6A Premium amortization Using the bond from Practice Exercise 14-54, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar.

PE14-7A Redemption of bonds payable A $2,300,000 bond issue on which there is an unamortized discount of $107,500 is redeemed for $2,231,000. Journalize the redemption of the bonds.

PE14-8A Journalizing installment notes On the first day of the fiscal year, a company issues $89,000, 6%, five-year installment notes that have annual payments of $21,128. The first note payment consists of $5,340 of interest and $15,788 of principal repayment. a. Journalize the entry to record the issuance of the installment notes. b. Journalize the first annual note payment.

PE14-9A Times interest earned

Sprout Company reported the following on the companys income statement in two recent

years:

Current Year prior Year

Interest expense $ 510,000 480,000

Income before income tax expense 5,610,000 6,720,000