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On the first day of the fiscal year, a company issues a $771,000, 9%, 10-year bond...

On the first day of the fiscal year, a company issues a $771,000, 9%, 10-year bond that pays semiannual interest of $34,695 ($771,000 x 9% x 1/2), receiving cash of $809,600. Journalize the entry to record the first interest payment and amortization of discount/premium using the straight-line method.

If an amount box does not require an entry, leave it blank or enter "0".

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Answer #1
1] Cash $ 8,09,600
Premium on bonds-payable [809600-771000] $             38,600
Bonds payable $ 7,71,000
[To record issuance of bonds]
2] Interest expense [34695-1930] $             32,765
Premium on bonds-payable [38600/20] $               1,930
Cash $             34,695
[To record first interest payment]
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