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On the first day of the fiscal year, a company issues a $3,400,000, 11%, 8-year bond...

On the first day of the fiscal year, a company issues a $3,400,000, 11%, 8-year bond that pays semiannual interest of $187,000 ($3,400,000 × 11% × ½), receiving cash of $3,994,267. 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, Premium on Bonds Payable, Cash

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Answer #1
Interest expense 149,858
Premium on Bonds Payable 37,142
Cash 187,000

Premium on Bonds Payable

= (3,994,267-3,400,000)/16

Note that I have rounded some numbers. Comment if you face any issues

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