Entries for lssuing bonds and amortizing premium by straight-line method Smiley Corporation wholesales repalr products...
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Entries for lssuing bonds and amortizing premium by straight-line method Smiley Corporation wholesales repalr products to equipment manufacturers. On April 1,201, Smiley issued $7,200,000 of 4 -year, 11% bonds at a market (effective) interest rate of 9%, receiving cash of $7,674,903. Interest is payable semiannually on April 1 and October 1 . a. Journasize the entry to record the issuance of bonds on Aprif 1,20rt, If an amount box does not require an entry, leave it blank. b. Joornalize the entry to record the first interest payment on october 1, 20r1, and amortization of bond premium for 6 months, using the stralght-line method. Round to the nearest doltar, If an amount box does nok require an entry, leave it blank. c. Why was the company able to issue the bonds for $7,674,903 rather than for the face amount of $7,200,000 ? The market rate of intereat is the contract rate of Intereit
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