Question

Just need help with part B please !!!

Entries for Issuing Bonds and Amortizing Premium by Straight-Line Method Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $2,100,000 of 5-year, 10% bonds at a market (effective) interest rate of 7%, receiving cash of $2,361,973. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, If an amount box does not require an entry, leave it blank. Cash 2,361,973 Premium on Bonds Payable 261,973 Bonds Payable 2,100,000 Feedback I b. Journalize the entry to record the first interest payment on October 1, 2016, and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Interest Expense 86,288 X Premium on Bonds Payable 18,712 X Cash 105,000 ✓ Een back

Answer 1

Correct entry at the time of Interest payment and amortization of Premium

Bond interest expense	$ 78,803
Premium on bonds payable	$ 26,197
Cash		$ 105,000

Working

Bond issue price	$ 2,361,973.00
Face value	$ 2,100,000.00
Premium on bonds payable	$     261,973.00
Number of Interest payments (5 years x 2)	10
Discount/ premium to be amortized per Half year	$       26,197.30
Interest paid in cash (2100000 x 5%)	$     105,000.00
Interest expense (105000-26197)	$       78,802.70