Premium Amortization On the first day of the fiscal year a c

Premium Amortization On the first day of the fiscal year, a company issues a $7,400,000, 9%, 9-year bond that pays semiannual interest of $333,000 ($7,400,000 × 9% x ½), receiving cash of $8,376,036. Journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank Interest Expense 384,224X Premium on Bonds Payable 54,224 X Cash 330,000X Feedback Check My Wark Bonds Payable is always recorded at face value. Any difference in 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.

Solution

General Journal Debit Credit Interest Expense $278,776 Premium on Bond Payable $54,224 Cash $333,000