Entries for Issuing Bonds and Amortizing Premium by Straight-Line MethodSmiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $8,500,000 of 8-year, 6% bonds at a market (effective) interest rate of 4%, receiving cash of $9,654,106. Interest is payable semiannually on April 1 and October 1.a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. Cash fill in the blank fill in the blank Premium on Bonds Payable fill in the blank fill in the blank Bonds Payable Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense fill in the blank fill in the blank Premium on Bonds Payable fill in the blank fill in the blank Cash fill in the blank fill in the blank

Amortization of Bond premium on straight line method =9,654,106-8,500,0008×2=1,154,10616=$72,132

Answered: Entries for Issuing Bonds and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method

Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $8,500,000 of 8-year, 6% bonds at a market (effective) interest rate of 4%, receiving cash of $9,654,106. Interest is payable semiannually on April 1 and October 1.

a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank.

Cash	fill in the blank	fill in the blank
Premium on Bonds Payable	fill in the blank	fill in the blank
Bonds Payable

Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

Interest Expense	fill in the blank	fill in the blank
Premium on Bonds Payable	fill in the blank	fill in the blank
Cash	fill in the blank	fill in the blank

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