Garcia company issues 8.00%, 15-year bonds with a par value of $290,000 and semiannual interest payments. on the issue date, the annual market rate for these bonds is 6.00%, which implies a selling price of 114 3/4.

Journal Entry

Explanation:

The Journal entry is shown below:-

Cash Dr,                                      $332,746

   To Bonds payable                                       $290,000

   To premium of the issue on bonds             $42,746

(Being bonds issued for cash premium is recorded)

Working note

Selling price of bonds = $290,000 × 114.75%

= $332,746

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