### Premium Amortization**Scenario:**On the first day of the fiscal year, a company issues an $8,000,000, 11%, five-year bond. This bond pays semiannual interest of $440,000, calculated as follows: $8,000,000 × 11% × (1/2). The company receives cash of $8,308,869 from issuing the bond.**Task:**Journalize the first interest payment and the amortization of the associated bond premium. Round to the nearest dollar. Leave any amount box blank if it does not require an entry.#### Journal Entries:- **Interest Expense:** _______ - **Premium on Bonds Payable:** _______- **Cash:** _______**Feedback:**- Bonds Payable is always recorded at face value.- Any difference in the issue price is reflected in a premium or discount account.- The straight-line method of amortization provides equal amounts of amortization over the life of the bond.Use this information to correctly record the first interest payment and premium amortization.

On the first day of the fiscal year, a company issues an $8,000,000, 11%, five-year bond that pays semiannual interest of $440,000 ($8,000,000 x 11% x 2), receiving cash of $8,308,869. Journalize the first interest payment and the amortization of the related bond premium. Round to the nyarest dollar. If an amount box does not require an entry, leave it blank. Interest Expense v Premium on Bonds Payable v Cash v

On the first day of the fiscal year, a company issues an $8,000,000, 11%, five-year bond that pays semiannual interest of $440,000 ($8,000,000 x 11% x 2), receiving cash of $8,308,869. Journalize the first interest payment and the amortization of the related bond premium. Round to the nyarest dollar. If an amount box does not require an entry, leave it blank. Interest Expense v Premium on Bonds Payable v Cash v

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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