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Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. issued $390,000 of 20-year, 12% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. Dec. 31 Recorded accrued interest for two months. Journalize the entries to record the above selected transactions for the current year. Round your answers to whole number. May 1 Nov. 1 Dec. 31 On the first day of its fiscal year, Chin Company issued $18,100,000 of five-year, 12% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bands were issued at a market (effective) interest rate of 13%, resulting in Chin Company receiving cash of $17,449,482. a. Journalize the entries to record the following: 1. Issuance of the bands. 2. First semiannual interest payment. The hond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dallar.) 3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. 1. 2. 3. b. Determine the amount of the bond interest expense for the first year. c. Why was the company able to issue the hands for only $17,449,482 rather than for the face amount of $18,100,0007 The market rate of interest is the contract rate of interest. On January 1, Year 1, Luzak Company issued a $63,000, 4-year, 12%, installment note to McGee Bank. The note requires annual payments of $20,742, beginning on December 31, Year 1. Journalize the entries record the following: Year 1 Jan. 1 Issued the note for cash at its face amount. Dec. 31 Paid the annual payment on the note, which consisted of interest of $7,560 and principal of $13,182. Year 4 Dec. 31 Paid the annual payment on the note, including $2,222 of interest. The remainder or the payment reduced the principal balance on the note. Issued the note for cash at its face amount. Year 1, Jan. 1 Paid the annual payment on the note, which consisted of interest of $7,560 and principal of 513,182. For a compound transaction, if an amount box does not require an entry, leave it blank. Year 1, Dec. 31 Paid the annual payment on the note, including $2,222 of interest. The remainder of the payment reduced the principal balance on the note. For a compound transaction, if an amount box does not require an entry, leave it blank. Year 4, Dec. 31
