Lerner Corporation wholesales repair products to equipment
manufacturers. On April 1, 2016, Lerner Corporation issued
$21,300,000 of five-year, 4% bonds at a market (effective) interest
rate of 3%, receiving cash of $22,282,220. Interest is payable
semiannually on April 1 and October 1. Required: A. Journalize the
entries to record the following. Refer to the Chart of Accounts for
exact wording of account titles. 1. Issuance of bonds on April 1,
2016. 2. First interest payment on October 1, 2016, and
amortization of bond premium for six months, using the
straight-line method. (Round to the nearest dollar.) B. Explain why
the company was able to issue the bonds for $22,282,220 rather than
for the face amount of $21,300,000.

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