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

On the first day of its fiscal year, Chin Company issued $$10,000,000$ of five$-$year, $7\%$ bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market $($effective$)$ interest rate of $8\%,$ resulting in Chin receiving cash of $$9,594,415.$

Question Content Area

a$.$ Journalize the entries to record the following:

Issuance of the bonds.

First semiannual interest payment. The bond discount is combined with the semiannual interest payment. $($Round your answer to the nearest dollar.$)$

Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. $($Round your answer to the nearest dollar.$)$

If an amount box does not require an entry, leave it blank.

$1.$

Cash

$9,594,415$

Discount on Bonds Payable

$405,585$

Bonds Payable

$10,000,000$

$2.$

Interest Expense

Discount on Bonds Payable

Cash

$3.$

Interest Expense

Discount on Bonds Payable

Cash