On the first day of the fiscal year, a company issues a $4,000,000, 6%, five-year bond that pays semiannual

On the first day of the fiscal year, a company issues a $4,000,000, 6%, five-year bond that pays semiannual interest of $120,000 ($4,000,000 × 6% × ½), receiving cash of $4,175,041. Journalize the bond issuance.


Answer:

Cash 4,175,041
Premium on Bonds Payable 175,041
Bonds Payable 4,000,000