# Premium AmortizationOn the first day of the fiscal year, a company issues a \$6,600,000, 11%, 8-year bond that pays semiannual interest of \$363,000 (\$6,600,000 × 11% × ½), receiving cash of \$7,341,446.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.

Question

On the first day of the fiscal year, a company issues a \$6,600,000, 11%, 8-year bond that pays semiannual interest of \$363,000 (\$6,600,000 × 11% × ½), receiving cash of \$7,341,446.

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.

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Step 1

Premium on bonds payable: It occurs when the bonds are issued at a higher price than the face value.

Step 2

Record the first interest payment:

Step 3

Calculate the amount of premium on bonds payable...

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