Ch 14-3 Exercises and Problems

1. EX.14-05.BLANKSHEET.ALGO
2. EX.14-06.ALGO
3. EX.14-07.ALGO
4. EX.14-08.BLANKSHEET.ALGO
5. EX.14-09.ALGO
6. EX.14-12.ALGO
7. EX.14-14.ALGO

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   Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method

   On the first day of its fiscal year, Chin Company issued $20,900,000 of five-year, 9% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Chin Company receiving cash of $19,324,628.

   a. Journalize the entries to record the following:

   1. Issuance of the bonds.
   2. First 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.)
   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.	Cash	fill in the blank 11ecaef68f95fec_2	fill in the blank 11ecaef68f95fec_3
   	Discount on Bonds Payable	fill in the blank 11ecaef68f95fec_5	fill in the blank 11ecaef68f95fec_6
   	Bonds Payable	fill in the blank 11ecaef68f95fec_8	fill in the blank 11ecaef68f95fec_9
   2.	Interest Expense	fill in the blank 11ecaef68f95fec_11	fill in the blank 11ecaef68f95fec_12
   	Discount on Bonds Payable	fill in the blank 11ecaef68f95fec_14	fill in the blank 11ecaef68f95fec_15
   	Cash	fill in the blank 11ecaef68f95fec_17	fill in the blank 11ecaef68f95fec_18
   3.	Interest Expense	fill in the blank 11ecaef68f95fec_20	fill in the blank 11ecaef68f95fec_21
   	Discount on Bonds Payable	fill in the blank 11ecaef68f95fec_23	fill in the blank 11ecaef68f95fec_24
   	Cash	fill in the blank 11ecaef68f95fec_26	fill in the blank 11ecaef68f95fec_27

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   Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond.

   b. Determine the amount of the bond interest expense for the first year. $fill in the blank e4ddf9fbb047ff5_1

   c. Why was the company able to issue the bonds for only $19,324,628 rather than for the face amount of $20,900,000? The market rate of interest is greater than the contract rate of interest.