Explain why the company was able to issue the bonds

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McCool Corporation wholesales repairs products to equipment manufactures. On April 1, 2010, McCool Corporation issued $30,000,000 of five year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $32,446,500. Interest is payable semiannually on April 1 and October 1. Journalize the entries to record the following:

a. Sale of bonds on April 1, 2012.
b. First interest payment on October 1 , 2012 and amortization of bond premium for six months, using the straight line method. (Round to the nearest dollar.)
c. Explain why the company was able to issue the bonds for $32,446,500 rather than for the face amount of $30,000,000.

Reference no: EM13134234

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