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cengageNowa l Online teaci?G Entries For issuing And Calin com/ilrn/takeAssignment/takeAssignmentMain.do?invoker assignments&tak; Br Show Me HowCaluator Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, Year 1, Smiley issued $8,000,000 or4-year, e% bonds at market (enktive) interest rate of 4%, receiving cash of S8,586,038. Interest is payable semannualy on April 1 and October 1 a. ournalize the entry to record the issuance of bonds on April 1, Year 1. If an amount box does not require an entry, leave it blank. Cash Premium on Bonds Payable Bonds Payable months, using the b. Journalize the entry to record the first interest payment on October 1, Year 1, and amortization of bond premium for six straight-line method. (Round to the nearest dolar.) If an amount box does not require an entry, leave it blank. Interest Expense Premium on Bonds Payable Cash Check My Work Nedt Check My Work All work saved

Explanation / Answer

Interest Expenses to be recognized = Cash paid - amotization of expenses = 240,000 - 586038 / 8 periods =

166745.25

a. Issuance of Bond Debit Credit Cash 8586038 Premium on Bonds payable 586,038 Bonds payable 8,000,000 b. First Interest Payment Interest expenses 166745.25 Premium on Bonds payable 73254.75 Cash 240000

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