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Entries for IssuingBondsand AmortizingPremiumby Straight-Line MethodDaan Corporation wholesales repair products to equipment ...

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Accounting

Entries for IssuingBondsand
AmortizingPremiumby Straight-Line MethodDaan Corporation wholesales repair products to equipment
manufacturers. On April 1,2016, Daan Corporation issued $3,300,000
of 7-year, 6% bonds at a market (effective) interest rate of 5%,
receiving cash of $3,492,900. Interest is payable semiannually on
April 1 and October 1.a.Journalize the entry to record the
issuance of bonds on April 1,2016. For a compound transaction, if
an amount box does not require an entry, leave it blank.b.Journalize the entry to record the
first interest payment on October 1,2016, 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.) For a compound transaction,
if an amount box does not require an entry, leave it blank.c.Why was the company able to issue the
bonds for $3,492,900 rather than for the face amount of
$3,300,000?The market rate of interest isthe contract
rate of interest.

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