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On January 1, 2021, Empresas Morosas issued bonds payable for a par value of $3,400,000....

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Accounting

On January 1, 2021, Empresas Morosas issued bonds payable for a par value of $3,400,000. The bonds mature in 20 years. The interest rate on the contract is 9% payable semi-annually on 30 June and 31 December. As the market rate of similar bonds is at 8%, the bonds were sold at a premium at 102% of their maturity value (par value).

1. Make the daily entry to record the first interest payment on June 30, 2021 assuming that the premium is amortized by the straight line method. Remember that you must compute the premium first.

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